Eutelsat takes stake in OneWeb
April 28, 2021
By Chris Forrester
Eutelsat is taking a 24 per cent stake in UK/India-owned low Earth orbiting business OneWeb. Eutelsat will invest $500 million (€455.4m) in the company, which “almost” fully funds the satellite venture. Eutelsat will use its FCC-granted ‘incentive’ payment for giving up its C-band frequencies over the US to fund its stake.
In a press statement, Eutelsat said: “With much of its global network already deployed, the OneWeb constellation, which enjoys valuable ITU-backed priority spectrum rights, will operate 648 satellites in low orbit (LEO) offering low latency. This first generation of satellites will offer significant regional coverage by the end of 2021, reaching global coverage the following year. OneWeb will be the first complete non-geostationary constellation with truly global coverage, significantly ahead of competing projects. It will deliver 1.1 Tbps of capacity addressing the government, fixed data and mobility markets. Plans include a second-generation constellation that will provide significant enhancements in terms of capacity, flexibility and economics. It anticipates annual revenues of circa $1 billion within three to five years following the full deployment of the constellation, with a partnership approach and profitable wholesale business model.”
Eutelsat’s investment leaves OneWeb almost fully funded and the company is well advanced in terms of securing its remaining funding needs this year.
Eutelsat says its investment will come with similar governance rights to the UK Government and Bharti, including board representation, where its position and expertise as one of the world’s leading satellite operators will help to drive the success of the new constellation.
“In a context where LEO features will enable the extension of the addressable market for satellite operators well beyond their current reach, the complementarity of Eutelsat’s and OneWeb’s resources and assets is expected to optimise both companies’ commercial potential thanks to Eutelsat’s strong commercial and institutional relationships, recognised technical expertise and global geostationary fleet, and OneWeb’s ability to address the multiple applications requiring low latency and ubiquity,” said Eutelsat.
“The investment will be 100 percent cash financed through Eutelsat’s liquidity position of €1.9 billion as at end-March 2021 and the $507 million US C-Band auction proceeds, and will be accounted for under the equity method. It is consistent with Eutelsat’s financial hurdle rates and does not alter its financial objectives, which are fully confirmed, including the medium-term net debt / EBITDA target of c.3x and a commitment to solicited Investment Grade credit ratings. Eutelsat’s policy of a stable to progressive dividend is also reiterated,” stated Eutelsat.
Commenting on the agreement, Rodolphe Belmer, Eutelsat’s CEO said: “We are excited to become a shareholder and partner in OneWeb in the run up to its commercial launch and to participate in the substantial opportunity represented by the non-geostationary segment within our industry. We are confident in OneWeb’s right to win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology. We look forward to working alongside the UK Government, Bharti and the other shareholders to open new opportunities and market access to ensure OneWeb maximises its potential. OneWeb will become our main growth engine outside our broadcast and broadband applications, as we continue to maximise cash-flow extraction from our highly profitable heritage business and grow our fixed broadband vertical leveraging our geostationary assets.”