OneWeb-Eutelsat Merger Hinges on Shareholder Vote

Eutelsat, the French operator of geostationary satellites, has announced that it has scheduled a shareholder vote for September 28 to seek final approval for its aquisition of OneWeb, a British low Earth orbit (LEO) broadband network.

This decision to schedule a shareholder vote comes after Eutelsat successfully navigated through all regulatory obstacles, paving the way for a multi-orbit merger that promises to reshape the satellite communication landscape.

Should Eutelsat's shareholders vote in favor of the transaction, the company is expected to proceed swiftly with its all-share deal to acquire OneWeb. The proposed deal, announced a year ago and valuing OneWeb at $3.4 billion, has already gained support from top shareholders, collectively holding 49.4% of Eutelsat as of March 31. Notably, OneWeb's shareholders have also previously given their approval for the merger.

Eutelsat's announced they secured regulatory clearances on August 21, during the company's shareholder meeting. These clearances include approvals from foreign investment authorities, highlighting the comprehensive nature of the company's preparations for the merger.

Eutelsat's strategic interest in OneWeb has been evident for some time. The French operator already possesses a 23% stake in OneWeb, acquired gradually as part of its strategic shift towards connectivity services. This shift is aimed at offsetting the decline in its legacy satellite TV business.

OneWeb's constellation deployment has reached completion, with 634 satellites now operational in low Earth orbit. This impressive feat positions OneWeb to achieve full global coverage by the end of the year, with an emphasis on low-latency broadband services. With the support of Eutelsat, the next OneWeb satellite consteillation is already under development; envisioned to be a $4 billion second-generation network.

The merger's success would not only solidify Eutelsat and OneWeb's joint growth plans but also create a new platform for mutual collaboration, including decisions regarding the selection of a manufacturer for OneWeb's second-generation satellites.

However, challenges and complexities loom. Eutelsat's aspirations to play a role in Europe's planned multi-orbit connectivity constellation, known as Infrastructure for Resilience, Interconnectivity and Security by Satellite (IRIS²), could face competition due to this merger. Eutelsat is vying for a spot in the project as part of a consortium with other prominent European space entities.

The merger's political landscape is intricate as well. The British government, having played a role in OneWeb's rescue from bankruptcy in 2020, holds a stake in the company. Following the merger, the government would retain priority voting rights. Concerns have been raised by a top European Union commissioner about potential conflicts of interest, given the UK's departure from the European Union. Eutelsat, however, assures stakeholders that OneWeb's integrity would be safeguarded through sufficient ring-fencing measures.

In a notable strategic shift, Eutelsat announced on July 28 its intention to return to growth next year, following a seven-year streak of declining annual sales. The company's renewed focus on connectivity services aligns well with its ambitions for the OneWeb merger and the potential transformation of the satellite communication sector.

As the shareholder vote approaches, industry observers are keenly watching for the outcome that could shape the future of both Eutelsat and OneWeb, as well as the broader landscape of satellite-based communication and connectivity.