Space race with Musk heats up as Eutelsat takes stake in OneWeb

Eutelsat, the European satellite operator 20% owned by the French state, is paying $ 550 million for a 24% stake in OneWeb, the pioneer of the space internet.

It marks a substantial step forward for the group, saved from bankruptcy by the British government and India’s Bharti Global last year, in its race for satellite space against Elon Musk, chief executive of SpaceX.

SpaceX’s OneWeb and Starlink aim to launch mega constellations of satellites into low earth orbit (Leo) to deliver high speed broadband from space.

The deal brings into the fold one of the world’s largest fixed-satellite operators, with numerous commercial, government and institutional clients who could be approached to purchase the low-latency satellite services offered by the Earth-orbiting fleet. bass from OneWeb, people close to the deal said.

OneWeb and Eutelsat would explore combined configurations for future services, they said.

OneWeb will now target annual revenue exceeding $ 1 billion within five years of the constellation’s full deployment, and it intended to deliver “a profitable wholesale approach.”

These low Earth orbit services, which have stronger signals and lower latency than traditional fixed satellite systems, are seen as the solution to providing high speed Internet access to the most remote areas of the planet. They will also be crucial for the provision of stand-alone systems.

Some 90 Leo constellations have been announced around the world, although SpaceX is clearly in the lead with nearly 1,400 satellites already in orbit.

On Tuesday, it scored a significant victory in its year-long battle with other existing and potential operators, including Amazon’s Project Kuiper, to amend its operating license to fly an additional 2,800 satellites closer to Earth.

Rivals including OneWeb and Viasat had complained that at low altitudes Starlink would interfere with their services and increase the risk of collision. These objections were rejected by the United States Federal Communications Commission.

Meanwhile, the stakes in OneWeb held by the UK government, Bharti and SoftBank, which invested $ 350 million in January, are expected to drop from around 30% each to about the same level as Eutelsat’s 24%. The UK will keep its share of gold.

Eutelsat’s investment suggests that the satellite operator’s valuation has risen by around 10 percent since its rescue. The UK and Bharti paid $ 500 million each for their stakes, compared to Eutelsat’s $ 550 million.

Eutelsat will also receive three seats on the board – the same as the UK and Bharti.

OneWeb said its plan to launch 648 first-generation satellites to provide global broadband service by next year was now 80% funded, for a total of $ 1.9 billion since exiting the process. Chapter 11 bankruptcy in November.

By the end of this year, OneWeb intends to offer more limited Internet service to the UK, Alaska, Northern Europe, Greenland, Iceland, the Arctic and Canada. The company launched 36 more satellites on Monday, bringing its total in-orbit fleet to 182.

For Eutelsat, the investment is a way to catch up in the race to provide Internet access from orbits closer to Earth than traditional fixed satellite services.

Eutelsat, which traditionally relied on broadcast revenues, has targeted satellite broadband as a core business capable of boosting the company’s growth. In December, the company launched its Konnect service to target remote areas of Europe and the UK. It also acquired UK-listed satellite broadband reseller Bigblu Broadband last year.

Eutelsat has signed agreements with telecommunications companies Orange and Telecom Italia to resell capacity because satellite has become a legitimate alternative to building expensive fiber networks.

Neil Masterson, chief executive of OneWeb, said Eutelsat’s global distribution network opens up new opportunities. “We look forward to working together to capitalize on various growth opportunities, while learning from the experiences and technical knowledge of our new partner.”

Rodolphe Belmer, CEO of Eutelsat, said low Earth orbit represented a “substantial opportunity. . . within our industry. We are confident in OneWeb’s right to win thanks to its earliness in the market, its priority spectrum rights and its scalable and scalable technology ”.

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