UK-based OneWeb and French Eutelsat officially discussing major merger

Eutelsat and OneWeb are engaged in discussions to create an all-share combination between the two companies, to create one joint communications entity.

French satellite operator Eutelsat confirmed the talks in a July 25 press release, after days of rumours about a potential merger between the two. OneWeb’s primary endeavour is its low earth orbit satellite constellation, through which it seeks to provide broadband internet across the world.

Eutelsat has 45 years of experience within the sector, and the ability to bring large-scale funding to the comparatively small OneWeb. If completed, the deal would represent a major consolidation of communications infrastructure, with the new entity will be the world's first to operate both low Earth orbit (LEO) and geosynchronous equatorial orbit (GEO) satellites.

The finished arrangement would see OneWeb and Eutelsat shareholders each holding 50% of the newly formed entity’s shares.

The British government invested £416 million in OneWeb in 2020, to save the company from bankruptcy. At the time, the deal was criticised due to OneWeb’s inability to provide GPS services seen as crucial to the UK following the UK’s withdrawal from the European Union.

Through a stake-backed investment bank, the French government currently has a 19.9% stake in Eutelsat, resulting in the merger bringing together French and UK governmental interests.

The OneWeb constellation currently stands at 428 satellites, around two-thirds of the 648 that was hoped to be in operation by the end of 2022. In March, OneWeb shelved plans to work with Russian space agency Roscosmos after it demanded that the UK government sell all its shares in the company.

In 2021, OneWeb and BT announced a Memorandum of Understanding (MoU) to explore providing stable internet connections to rural customers in the UK using its network of low LEO satellites. It is hoped that the network will provide for those in remote areas without existing cable infrastructure.

Satellite internet is a hotbed of innovation and rivalry right now, with SpaceX’s constellation of Starlink satellites growing by the month and recently gaining FCC approval to provide internet to moving vehicles. The company is currently engaged in a very public dispute with the DISH Network, whose proposals to share the 12GHz band for 5G services it claims will unacceptably disrupt Starlink services.

In contrast, OneWeb announced an agreement with SpaceX to launch some of OneWeb’s remaining satellites earlier this year. The two companies have indicated that they do not consider their respective interests to conflict.

“The combined entity would be the first multi-orbit satellite operator offering integrated GEO and LEO solutions and would be uniquely positioned to address a booming ~$16bn (2030) Satellite Connectivity market,” said Eutelsat in a statement.

“OneWeb is one of the two only global LEO networks and has experienced strong momentum over recent months, with service expected to be fully deployed in 2023.”