French satellite company Eutelsat has said it is in talks about a possible merger with British rival OneWeb, to create, in its words, a “global champion” in satellite broadband internet, rivaling American services like Elon Musk’s Starlink and Amazon Kuiper Project.
Satellite broadband promises to bring coverage to the most remote areas of the planet, eliminating dependence on the classic network lines that can be found in urban radios and surrounding areas.
Merger of European companies seeks to compete with Starlink
“Following recent market rumours, Eutelsat Communications confirms that it has entered into discussions with its co-shareholders in OneWeb regarding a possible combination of all actions to create a world leader in Connectivity with complementary GEO/LEO activities”pointed out the release official of the French company, in response to rumors that, citing nearby sourcesreached the press days before.
The company created as a result of the merger, if this transaction were completed, would become the first multi-orbit satellite operator to offer integrated solutions GEO (geostationary orbit, located 35,786 kilometers from the earth’s surface) and LEO (low orbit, located between 160 and 2,000 kilometers high), a condition that would put it in a unique position to tackle a booming satellite connectivity market.
As reported by Eutelsat, OneWeb is one of only two global LEO networks and has experienced strong momentum in recent months. Furthermore, the service is expected to be fully implemented in 2023.
Both companies already have a certain closeness, as Eutelsat currently owns 23% of OneWeb’s share capital, along with a consortium of high-profile public and private investors. Eutelsat and OneWeb shareholders would each hold 50% of the combined group’s shares, according to the terms of the transaction being discussed.
As we have been able to learn throughout various business acquisitions that have taken place in the technology sector lately, the declaration of an intention to purchase is not a guarantee that it will materialize. “There can be no assurance that these discussions will result in any agreement. Eutelsat will inform the market as soon as there are news”says the company’s statement.
Starlink is in the process of expansion, Amazon’s Project Kuiper should start its activities later this year, and other operators, with less deployment, also offer their services in more limited areas. The strong arrival of a new actor in this medium could imply an important item for this growing industry, fostering more dynamic competition.