Eutelsat Raises Stake In OneWeb

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French satellite firm Eutelsat increases stake in UK-based OneWeb, with additional $165m investment in satellite internet firm

French satellite operator Eutelsat deepens its journey into LEO (low Earth orbit) space, after increasing its stake in UK satellite internet firm OneWeb.

Eutelsat has exercised a call option on a portion of the latest OneWeb funding round subscribed by Bharti, for a consideration of $165 million. This takes its shareholding from 17.6 percent to 22.9 percent.

In April this year Eutelsat invested $550m in OneWeb, joining other leading shareholders namely the British government and Bharti Global. That deal was completed on 8 September.

Increased investment

But now Eutelsat is opting to push another $165m to raise its stake in OneWeb, with this transaction expected to be completed around year-end 2021 – subject to the usual regulatory authorisations.

Eutelsat justified the increased investment, saying that since its initial investment, “OneWeb has gained significant traction, both operationally, with a 100 percent launch success rate leading to nearly half of the constellation now in orbit, and commercially, with numerous distribution partnerships secured ahead of its partial entry into service, which remains on track for end-2021.”

OneWeb currently has 288 satellites in orbit, and these satellites will form part of its 648 LEO satellite fleet that will deliver high-speed, low-latency global connectivity, covering the UK, Alaska, Northern Europe, Greenland, Iceland, the Arctic Seas and Canada, and will be switched on before the end of the year.

OneWeb then intends to make global services available in 2022.

Unlike SpaceX’s Starlink, OneWeb intends to sell its connectivity services to governments and corporate customers that provide internet service to airplanes, ships and boats, via its planned 648 satellites.

It will eventually sell bandwidth to consumer-facing internet providers.

OneWeb meanwhile has also benefitted from an additional $500 million commitment by Bharti and a $300 million capital injection from South Korea’s Hanwha.

“We are hugely excited to grasp this opportunity to deepen our commitment to OneWeb,” said Rodolphe Belmer, Eutelsat’s CEO. “The significant progress it has made in the run-up to its now imminent entry into service, together with the vote of confidence demonstrated by the commitment of both its investors and future customers, makes us even more convinced of OneWeb’s right-to-win in the low earth orbit (LEO) constellation segment.”

It comes after Eutelsat rejected an unsolicited takeover proposal from French billionaire Patrick Drahi.

“Pursuant to market rumours, Eutelsat Communications confirms that it has received an unsolicited, preliminary and non-binding proposal from Patrick Drahi in connection with a potential transaction on all of the company’s share capital,” said the firm at the time. “The relevant governance bodies of Eutelsat Communications have unanimously decided not to engage in discussions based on the terms of this proposal.”

Secured future

It has been an eventful couple of years for OneWeb, after it went into administration in March 2020, despite raising $3 billion (£2.4bn) in venture funding since its founding.

The firm made the decision to file for bankruptcy protection in the United States as the Coronavirus lockdown began, after it ran out of cash and failed to secure additional funding.

Lead investor Softbank, which had led two previous funding rounds in 2016 and 2019, had backed away from further funding talks with OneWeb.

But then in July 2020 the British Government, alongside Bharti Global Limited, announced they would acquire the firm for $1 billion.

The UK Government reportedly took a £400 million stake in London-based OneWeb.

Bharti, via its Bharti Airtel division, is the third largest mobile operator in the world, with over 425 million customers, and has “its own extensive mobile broadband networks and enterprise business, which will act as the testing ground for all OneWeb products, services, and applications.”

Crowded market?

In February 2020 OneWeb had launched 34 satellites into orbit to join the first six broadband satellites in February 2019.

The firm had added another 34 satellites in March 2020, just before it entered Chapter 11.

OneWeb was brought out of bankruptcy in November last year after its future was secured by the British Government, along with Indian conglomerate Bharti Global Ltd.

Rival firms

Yet rival SpaceX continues to build and launch its own constellation of internet satellites.

SpaceX currently has 1,657 working broadband satellites in orbit for its Starlink network – but it should be noted that its network architecture and reach requires more satellites than OneWeb.

In January 2021, Ofcom approved Space X Starlink satellite broadband service for use in the United Kingdom.

Other companies are also racing to construct satellite-based broadband networks.

These include Jeff Bezos’ Blue Origin, which intends to deploy a 3,200-satellite network known as Project Kuiper.

Additional players include Kepler, LeoSat and Telesat Canada.

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Author: Tom Jowitt
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