(BFM Bourse) – The French satellite operator confirmed on Monday that it had initiated discussions with a view to a possible merger with the British OneWeb. This merger would allow the emergence of a new pan-European giant in the face of Starlink, the project of American billionaire Elon Musk. The marriage project is far from unanimous on the stock market, the title accelerated its losses and fell by more than 17% on Monday.
Following recent market rumours, Eutelsat Communications confirms that it has entered into discussions with its co-shareholders in OneWeb, with a view to a possible merger of the two companies through an exchange of shares. This merger would represent a logical continuation of the partnership between Eutelsat and OneWeb, which began with Eutelsat’s acquisition of a stake in OneWeb in April 2021, followed by the worldwide distribution agreement announced in March 2022. Eutelsat currently holds 23% of the capital of OneWeb alongside a consortium of leading public and private investors.
Eutelsat is a specialist in geostationary orbit, with its fleet of 35 satellites positioned 36,000 kilometers from the Earth for satellite broadcasting and high-speed internet services,
The British company OneWeb has already deployed 428 of the 648 satellites in its constellation in low orbit, a few hundred kilometers above sea level in order to provide high-speed internet with low latency or data transmission delay, essential to meet to growing needs.
The emergence of a pan-European leader to challenge Starlink
This merger project aims to position the whole in the high-speed space internet sector, in particular to serve isolated regions without fiber optics or to be able to meet the future needs of the connected car, for example.
“The combined entity would be the first multi-orbit satellite operator offering integrated GEO/LEO (geostationary and low orbit) solutions, and would be uniquely positioned to address the growing connectivity market, estimated at $16 billion. by 2030,” said Eutelsat in a press release on this merger project unveiled on Saturday by the Bloomberg agency.
This project would make it possible to bring out a new giant in front of Starlink, the constellation of American billionaire Elon Musk, which has already deployed more than half of the 4,408 satellites in its constellation. Jeff Bezos, founder of Amazon, plans to deploy more than 3,200 satellites for his Kuiper constellation.
The European Union also wants to deploy its own constellation in low orbit of around 250 satellites from 2024 in the name of sovereignty. According to European Commissioner Thierry Breton, this constellation will make it possible to put an end to “white zones” in Europe, to offer encrypted communications to States using quantum technologies, and to have redundancy with respect to terrestrial networks, targets of cyberattacks. As for China, it also has its own constellation project, Guowang, with 13,000 satellites.
A transaction by exchange of shares
“Under the terms of the contemplated transaction, the shareholders of Eutelsat and OneWeb would each hold 50% of the shares of the combined group,” said Eutelsat. The transaction will be done by exchange of shares, the shareholders of each of the two groups holding half of the future entity.
Bankrupted during the pandemic, OneWeb was taken over by Indian conglomerate Bharti and the UK government. Besides Bharti (30%) and Eutelsat (22.9%), the capital of OneWeb includes the British government (17.6%), the Japanese Softbank (17.6%) and the Korean conglomerate Hanwa (8.8%) .
Eutelsat is 20% owned by Bpifrance, the French State’s public investment bank, as well as by the Strategic Participation Fund (FSP) held by seven French insurers (7.6%), the rest of the capital being floating.
“There is no guarantee that these discussions will lead to an agreement. Eutelsat will inform the market of any new development in due course”, adds the French operator. This uncertainty about the outcome of the negotiations led to the plunge of 17% to 8.71 euros in the Eutelsat share, on the Paris Stock Exchange, which fell slightly by 0.09%.
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