Regulatory Delays in India Hinder Eutelsat's OneWeb LEO Constellation Goal

Eutelsat, the French satellite operator has confirmed that regulatory delays in India have disrupted its plans to reach 90% of the world with its OneWeb low Earth orbit (LEO) broadband constellation by summer.

Last year, Eutelsat became the first company to receive permission from India's newly established space regulator, IN-SPACe, to provide commercial satellite broadband services. However, the allocation of necessary radio waves by the Indian government is still pending.

During Eutelsat's May 14 earnings call, Christophe Caudrelier, Eutelsat’s chief financial officer, stated that while the company is progressing with landing rights and operating permits, India remains a notable exception. This delay impacts Eutelsat’s goal of achieving mid-2024 coverage.

With 633 satellites already in LEO, Eutelsat had initially planned to launch worldwide services in early 2024. However, the lag in regulatory approvals and the rollout of network gateways has caused delays.

Despite these setbacks, Eutelsat has deployed 34 gateways and aims to reach 38 by mid-2024, which is sufficient to cover 90% of the globe.

To provide global services, excluding countries like Afghanistan, Belarus, China, Hong Kong, Cuba, Ecuador, Iran, North Korea, and Russia, around 40 gateways are required.

Eutelsat has highlighted substantial "take-or-pay" contracts in India for LEO broadband capacity, contributing to a €3.9 billion ($4.2 billion) backlog of future revenues. Although Eutelsat has not disclosed OneWeb's financials separately since acquiring the U.K.-based company last year, connectivity forms more than half of this backlog.

Eutelsat remains on track to select manufacturers for developing a second-generation OneWeb constellation by early summer. The company does not plan to launch another geostationary satellite until 2026.

Connectivity Pivot

Historically a provider of satellite TV services, Eutelsat is shifting focus to connectivity services as the TV market declines. TV services accounted for about 53% of the €301 million revenue recorded for the quarter ending in March. Fixed and mobile connectivity services represented 19% and 13% of revenues, respectively, with government services contributing 15%.

Video revenues decreased by 4.9% year-on-year, adjusted for currency changes. However, government, mobile, and fixed connectivity revenues increased by 22.1%, 48%, and 24.2%, respectively.

These growth areas contributed to an 8.3% year-on-year total revenue increase, positioning Eutelsat for annual growth following years of revenue declines in its legacy video business.

A significant market for Eutelsat’s government and enterprise LEO services is Saudi Arabia. OneWeb has partnered with NEOM Tech & Digital Company to develop a city and tourist destination in the country's northwest.

Changing Competition

Eutelsat is also navigating competition from SpaceX’s Starlink LEO constellation and European rival SES’s plans to acquire Intelsat. SES's acquisition, expected to cost around $3 billion, limits SES’s investment capacity in other projects.

Eutelsat has a significant deal worth up to $500 million to sell LEO capacity to Intelsat, which is unaffected by SES’s acquisition plans.

Despite Starlink's expansion into OneWeb’s target markets, Eutelsat has confirmed they can comfortably manage with a "5-20% market share of the total LEO market.

Eutelsat provided limited details on ongoing discussions with external infrastructure investors about its ground network.