French satellite operator Eutelsat to merge with Britain’s OneWeb

Eutelsat announced on Tuesday July 26 that it had signed a memorandum of understanding with its competitor. Discussions will continue but the objective of this strategic merger is to create a European giant capable of competing with the major American operators.

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Competitors are well identified. There is the boss of Amazon, Jeff Bezos, and his desire to deploy by 2029 a constellation of some 3,300 mini-satellites in low orbit, that is to say only a few hundred kilometers above sea level. against 36,000 km for geostationary orbit. The other big rival is Starlink, which depends on SpaceX, owned by American billionaire Elon Musk. The founding boss of Tesla already has 2,000 satellites in orbit and plans to go up to 42,000 units.

5G connectivity via satellites in low earth orbit makes it possible to offer fast internet in remote places, extreme geographical areas. Having access to the web at sea, in the mountains, in the air or anywhere else in the world is now possible thanks to these new constellations. One can wonder about the usefulness of having the internet in the depths of the desert: energy-consuming and ecologically questionable, some will say. The fact is that these networks are also used for telemedicine and as a backup solution to terrestrial systems in the event of breakdowns or major disasters. Hence the economic and strategic issue.

If all goes according to plan, the deal would close by the middle of next year and value OneWeb at nearly 3.5 billion euros. Concretely, the merger would take place by exchange of shares. Eutelsat is already a shareholder of OneWeb and to convince the other shareholders to participate in the operation, the French proposes to take over the shares of the British with a capital gain of two euros per title to create a giant at parity. The headquarters of the new group would be based in Paris and the operational managers would be French.

Paris and London want to play on an equal footing but the British government intends to obtain special rights. Discussions are tight with the Indian conglomerate Barthi, which remains a large shareholder of OneWeb after having saved it from bankruptcy during the Covid crisis. In short, a post-Brexit Franco-British operation against a backdrop of European technological sovereignty. We’ve seen it simpler, but on paper it’s still positive for the European space industry.

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