French satellite operator Eutelsat joins British government and Bharti, with investment so as to access to its LEO broadband constellation
French satellite operator Eutelsat has got itself into LEO (low Earth orbit) space with a significant investment in UK satellite internet firm OneWeb.
Eutelsat announced on Tuesday that in return for a $550m investment, it will acquire a 24 percent stake in OneWeb, joining other leading shareholders namely the British government and Bharti Global.
The closing of this deal is expected in the second half of this year, subject to regulatory approval.
The move comes just days after OneWeb successfully delivered another 36 satellites into orbit with its latest rocket launch at the Vostochny Cosmodrome in Russia.
OneWeb’s launch this week has brought the firm a step closer to its ‘Five to 50’ ambition, which enables the start of commercial service by the end of the year.
It comes after OneWeb launched 36 satellites in late March that grew its total satellites into orbit to 146.
With the latest launch, its total number of satellites in low earth orbit (LEO) is 182.
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.
The firm has recently demonstrated its service to the US Government, and is rolling out additional demonstration kits and demo centres in locations such as the UK, Alaska, Maryland and more.
“OneWeb will be the first complete non-geostationary constellation with truly global coverage, significantly ahead of competing projects,” noted Eutelsat. “It will deliver 1.1 Tbps of capacity addressing the government, fixed data and mobility markets.”
“Plans include a second-generation constellation that will provide significant enhancements in terms of capacity, flexibility and economics,” the firm added “It anticipates annual revenues of circa $1 billion within three to five years following the full deployment of the constellation, with a partnership approach and profitable wholesale business model. Eutelsat’s investment leaves OneWeb almost fully funded and the company is well advanced in terms of securing its remaining funding needs this year.”
“We are excited to become a shareholder and partner in OneWeb in the run up to its commercial launch and to participate in the substantial opportunity represented by the non-geostationary segment within our industry,” said Rodolphe Belmer, Eutelsat’s CEO.
“We are confident in OneWeb’s right to win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology,” said Belmer. “We look forward to working alongside the UK Government, Bharti and the other shareholders to open new opportunities and market access to ensure OneWeb maximizes its potential.
And Belmer was keen to point out that OneWeb will be a major growth driver at Eutelsat, which is the world’s third largest satellite operator (in revenue terms).
Indeed, Eutelsat’s satellites are used for broadcasting nearly 7,000 television stations around the world.
“OneWeb will become our main growth engine outside our broadcast and broadband applications, as we continue to maximize cash-flow extraction from our highly profitable heritage business and grow our fixed broadband vertical leveraging our geostationary assets,” said Belmer.
And the British government welcomed its new shareholder partner.
“Today’s investment is another giant leap forward for OneWeb in realising its ambition to provide global broadband connectivity around the globe,” said Business Secretary Kwasi Kwarteng. “Eutelsat brings over forty years of experience in the global satellite industry and this exciting new partnership puts OneWeb on a strong commercial footing, and the UK at the forefront of the latest developments in low Earth orbit technology.”
“This comes alongside yesterday’s exciting news that a further 36 satellites were launched into space and demonstrates the momentum behind OneWeb and the promising efforts to provide connectivity to some of the world’s most remote places,” said Kwarteng.
“As OneWeb accelerates the deployment of its fleet and engages in discussions with potential customers, we welcome the powerful support of Eutelsat during the next exciting phase of our journey together, benefitting both companies equally,” added OneWeb CEO Neil Masterson.
“Eutelsat is a great partner for OneWeb thanks to our high level of complementarity in terms of technology, assets, addressable markets, geographic reach and institutional relationships,” said Masterson.
OneWeb had been brought out of bankruptcy in November last year after its future was secured by the British Government, along with Indian conglomerate Bharti Global Ltd.
The firm had 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 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.”
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.
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 648 satellites.
It will eventually sell bandwidth to consumer-facing internet providers.
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.