After plenty of mainstream media chatter, Eutelsat and OneWeb have confirmed their satellite-themed merger will happen.
France-based Eutelsat Communications and OneWeb shareholders have signed a Memorandum of Understanding merging both companies in an all-share transaction.
Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s constellation of 648 low Earth orbit (LEO) satellites, of which 428 are currently in orbit.
The deal gives OneWeb, which was rescued by the UK taxpayer via a £400 million bailout, a valuation of $3.4 billion (£2.8 billion). The deal was structured as an exchange of OneWeb shares by its shareholders, including the UK government, with new shares issued by Eutelsat.
The merger creates a “global player” in space-based internet connectivity – and in the quest to build their satellites they can rival the likes of Elon Musk-owned SpaceX’s Starlink and Amazon’s Project Kuiper.
However, it does raise some issues, which the mainstream media has naturally picked up on.
Sky News explains that there is the threat of complications arising from Chinese interest in Eutelsat. This creates a potential national security concern that earlier this month saw a UK/China tech deal – i.e., Beijing Infinite Vision Technology trying to buy vision sensing technology from the University of Manchester – being blocked under new powers for the first time.
OneWeb has been busy. As reported in April, the UK tech firm said it will work with New Space India to help complete its satellite launch programme.
Although, Sky News points out that OneWeb’s work has been compromised by the Russian invasion of Ukraine, as international sanctions now prevent the use of Russia-based satellite launches.
- OneWeb Unveils Satellite Launch Programme with New Space India – read the news here
In terms of more details about the deal, Eutelsat and OneWeb reckon the connectivity market opportunity, which is fuelled by customers in both the B2B and B2C segments, is a good one.
They note that these market segments are forecast to grow by three and five times respectively over the next decade, to reach a combined value of circa $16 billion (£13 billion) by 2030, with growth being served by both GEO HTS and LEO capacity.
While they talk about “revenue, cost and capex synergies”, there are no details about any job cuts as part of the deal.
Trading under its existing name, OneWeb will continue to operate the LEO business, with OneWeb’s headquarters remaining in the UK.
Eutelsat will continue to be headquartered and domiciled in France, listed on Euronext Paris and would apply for admission to the standard segment of the UK Official List of the UK Financial Conduct Authority and to trading on the London Stock Exchange.
Eva Berneke, Eutelsat’s CEO, would continue as CEO of the combined entity.
The combined entity is forecast to have revenues of circa €1.2 billion (£1 billion) and EBITDA of circa €700 million (£593 million) in FY22-23. Revenues are forecast to grow at low double-digit CAGR over the next decade.
EBITDA is expected to grow at a mid-teen CAGR over the medium to long term, “outpacing sales growth, with EBITDA margin levels moving gradually back in line with best-in-class GEO standards”.
The transaction is expected to close by the end of the first half of 2023.
Image courtesy of Eutelsat.
