Eutelsat raises stake in OneWeb

Leading French operator takes involvement with growing Bharti/UK government-owned satellite firm into higher orbit, becoming second largest shareholder

After announcing in April 2021 that it was to invest in the growing satellite broadband provider, Eutelsat Communications has exercised a call option on a portion of the latest OneWeb funding round subscribed by Bharti, for a consideration of $165m, taking its shareholding from 17.6% to 22.9%.

The transaction is said to have been undertaken on identical financial terms to the French satellite operator’s initial investment of $550m, announced in April and completed on 8 September. The completion of this latest transaction is expected around year-end 2021, subject to regulatory authorisation.

OneWeb’s capital structure is being further strengthened with an additional $500m commitment by Bharti, completing the funding of its first-generation constellation, and a $300m capital injection from South Korea’s Hanwha.

Following the exercise of the call option and the completion of Hanwha’s investment, Eutelsat’s 22.9% holding will make it the second-largest shareholder behind Bharti, with 30%, thereby strengthening its position as a key shareholder and partner of OneWeb.

Formed in 2012 with the aim of addressing the connectivity needs of underserved communities, OneWeb has always claimed that its satellite network has a unique capability to provide improved capacity, mobile resilience, backhaul and coverage, including fixed wireless access, in challenging geographic locations.

The company developed “cutting-edge” satellite technology from its bases in the UK and the US, emulating Elon Musk’s Starlink project, with a constellation of global gateway stations and a range of user terminals to provide an affordable, fast, high-bandwidth, low-latency communications service, connected to internet of things (IoT) devices and making a pathway for mass adoption of 5G services.

The launch of more than 30 craft on 21 August brought OneWeb’s total in-orbit constellation to 288 satellites. The company said it remained on track to deliver a global service in 2022 and was seeing growing demand from telecommunications providers, internet service providers and governments worldwide to offer its low-latency, high-speed connectivity services to the hardest-to-reach places.

“The significant progress OneWeb has made in the run-up to its now imminent entry into service, together with the vote of confidence demonstrated by the commitment of investors and future customers, makes us even more convinced of OneWeb’s right to win in the low earth orbit constellation”
Rodolphe Belmer, Eutelsat

Commenting on the transaction, Eutelsat chief executive officer Rodolphe Belmer said: “We are hugely excited to grasp this opportunity to deepen our commitment to OneWeb. 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 investors and future customers, makes us even more convinced of OneWeb’s right to win in the low Earth orbit constellation segment.”

Eutelsat added that since its initial investment, OneWeb had gained significant traction, both operationally, with a 100% 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 the end of this year. These have included US comms giant AT&T, which wants to harness the capabilities of satellite technology to improve access for its business customers in remote and challenging geographic locations, complementing its existing technologies such as fibre broadband.

AT&T will use the OneWeb satellites to enhance connectivity when connecting to its enterprise, small and medium-sized business and government customers, as well as hard-to-reach cell towers. OneWeb expects to attain global coverage with a total fleet of 648 satellites by the end of 2022. AT&T business and government customers in Alaska and northern US states will be covered later this year as part of OneWeb’s Five to 50 mission to cover regions north of 50 degrees latitude, including the UK, Canada, Alaska and Arctic region.

Eutelsat’s investment comes after it delivered strong full-year 2021 performance in terms of cash flow generation and leverage reduction, and rejected a takeover bid from Altice Europe founder Patrick Drahi.

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