OneWeb Acquisition: Key Details, Impact, and What Comes Next

The acquisition of OneWeb by Eutelsat marks a significant milestone in the satellite connectivity industry. By merging Eutelsat's geostationary satellite capabilities with OneWeb's low Earth orbit constellation, the combined entity aims to enhance global connectivity solutions. This strategic move positions the new Eutelsat Group as a formidable competitor in the rapidly growing satellite market, addressing diverse connectivity needs across various sectors.

What Is OneWeb?

Founded in 2012, OneWeb specializes in providing Low Earth Orbit (LEO) satellite connectivity solutions. Its core services include Primary Connectivity for network expansion in remote areas, Back-Up Connectivity for resilient network support, and Hybrid Connectivity that integrates LEO with other networks. OneWeb's unique selling points include high-speed data transfer, low latency, and scalable solutions designed for diverse sectors such as maritime, aviation, and government, ensuring global reach and innovative hybrid solutions.

Who Acquired OneWeb?

Eutelsat is a prominent satellite operator known for its extensive global satellite communication services. The company offers a range of key products, including video broadcasting solutions, broadband connectivity, and data services. Eutelsat's satellite coverage spans GEO and LEO orbits, providing comprehensive regional and global reach. With a strong market position, Eutelsat serves diverse sectors such as broadcast, enterprise, maritime, aviation, telecom, and government, solidifying its influence in the satellite communication industry.

When Was OneWeb Acquired?

Eutelsat completed its acquisition of OneWeb on September 28, 2023. This merger aligns with the industry's trend towards combining geostationary and low Earth orbit satellite capabilities to meet the growing demand for global connectivity. The timing is significant as it follows other major industry consolidations, such as Viasat's acquisition of Inmarsat, highlighting the competitive landscape in satellite communications.

Why Was OneWeb Acquired?

• Market Expansion: The merger allows Eutelsat to expand its market by combining its geostationary satellite business with OneWeb’s LEO constellation. This combination enables the company to address a wider range of customer requirements and provide hybrid connectivity services globally. The combined group forecasts a double-digit compound annual growth rate (CAGR) for revenues over the medium to long term, aiming to reach around 2 billion euros ($2.1 billion) by 2027.
• Technology Integration: The merger creates the only operator of a geostationary and LEO satellite network, which is seen as critical for meeting future demand for connectivity worldwide. OneWeb completed the deployment of its constellation earlier this year and currently has 634 LEO satellites, preparing to offer services globally before the end of 2023. The combined entity plans to move forward with joint plans for a $4 billion second-generation LEO network slated to enter service by early 2028.
• Competitive Advantage: The merger gives Eutelsat and OneWeb the scale, financial strength, and business proposition to capitalize on significant market opportunities. The low-latency LEO network is set to play an important part in Eutelsat’s pivot to connectivity services, which is expected to help the company return to growth after a decline in its video business. The British government’s stake and board representation in the combined company are expected to ensure that the United Kingdom remains the preferred location for OneWeb’s commercial activity, potentially providing a competitive edge in the satellite manufacturing, space services, and telecoms sectors.

Acquisition Terms

• Acquisition Price: The merger values OneWeb at $3.4 billion.
• Payment Method: The transaction was completed as an all-share deal.
• Key Conditions or Agreements:
  • Approval from at least two-thirds of Eutelsat’s shareholders.
  • Regulatory permissions were required and received by August 10.
  • OneWeb will operate as a subsidiary called Eutelsat OneWeb.
  • The British government retains voting rights in OneWeb.
  • Eutelsat has applied to trade shares on the London Stock Exchange.
  • The combined entity aims to deploy a $4 billion second-generation LEO network by early 2028.
  • The British government’s stake and board representation in the combined company aim to ensure the UK remains the preferred location for OneWeb’s commercial activity.
  • Balanced board and governance structure, including Eutelsat’s Chairman and CEO, OneWeb’s Chairman, and independent directors proposed by both shareholders.
  • Strategic shareholder support from entities like Bpifrance, Fonds Stratégique de Participations, and CMA CGM.
  • Dividend proposal of €0.93 per share with a scrip option for FY 2021-22.
  • Exclusivity commitments by Eutelsat and key shareholders.
  • Lock-up period of six months for shareholders.
  • Headquarters and listings: OneWeb will continue to operate from the UK, and Eutelsat will remain headquartered in France, listed on Euronext Paris, and apply for admission to the London Stock Exchange.

Impact on OneWeb

The acquisition of OneWeb by Eutelsat has led to significant changes in operations and management. OneWeb now operates as a subsidiary called Eutelsat OneWeb, with its operations center remaining in London. Eutelsat continues to be headquartered in Paris and listed on the Euronext Paris Stock Exchange, with plans to also trade on the London Stock Exchange. The combined entity features a balanced board and governance structure, including Eutelsat’s Chairman and CEO, OneWeb’s Chairman, and independent directors proposed by both shareholders. Notably, OneWeb CEO Neil Masterson is expected to leave by the end of the year, while Eva Berneke continues as CEO of the combined entity.

The merger has also impacted OneWeb's product offerings and services. The combined entity aims to offer a unique GEO-LEO hybrid service, providing high-speed, low-latency connectivity solutions. This strategic move is expected to accelerate the commercialization of OneWeb’s fleet and enhance Eutelsat’s growth profile. The merger positions the company to address a wider range of customer needs, expanding the addressable market and offering enhanced connectivity services globally. While specific employee reactions are not detailed, key executives have expressed excitement about the opportunities this merger brings. Customer reactions have been generally positive, with expectations of improved service capabilities and a seamless user experience.

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