The merger between Intelsat and Jersey-based OneWeb collapsed June 1st, and rival Inmarsat’s share price rocketed upward, rising from £8.08 to £8.60 on the London stock exchange. The dramatic rise reflected rumours that Inmarsat is a target for Japan’s SoftBank.
June 1st saw Washington-based Intelsat say that the merger with OneWeb was likely to formally be pulled today. Japanese media giant SoftBank had attempted to engineer the merger with OneWeb – where it owns 40 per cent of the company – via a $1.7 billion financial restructuring of Intelsat’s debts.
Alok Sama, CFO at SoftBank, said June 1st: “While we are disappointed Intelsat was not able to achieve an acceptable agreement with its bondholders, we continue to be enthusiastic about OneWeb’s standalone prospects, and its potential to disrupt the satellite industry and communications business generally. SoftBank will continue to work with the OneWeb management team to seek alternative paths to accelerate its strategy.”
However, the Financial Times newspaper June 2nd suggests the Intelsat/OneWeb merger may not be quite dead. They quote analysts at Citigroup saying that the termination of the financial restructuring could be a “negotiating ploy” in SoftBank’s move on Intelsat’s debt-holders.
Those sentiments are echoed by Bloomberg, which adds that OneWeb is already in discussions with other satellite operators and additionally names Telesat of Canada and SES of Luxembourg (SES share price rose 4.1 per cent in Paris trading June 1st).
OneWeb is in the process of building a ‘super-constellation’ of an initial 648 satellites, the first batch of which is likely to be launched in March next year and to come into use as a global service during 2019. Production of the first batches of satellites is already underway by Airbus in Toulouse, France, and a dedicated construction facility is being built in Florida for mass-production.
Besides SoftBank, other investors in OneWeb include Qualcomm, Bharti (India), Coca-Cola, Virgin, Airbus, Group Salinas, Hughes and MDA of Canada, and, as mentioned, Intelsat.