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Eutelsat/OneWeb: “Synergies of more than €1.5bn”

May 12, 2023

Eutelsat says that its upcoming merger with Low-Earth orbiting constellation OneWeb will achieve estimated savings for between €1.5 billion-€1.8 billion in the two businesses’ operational costs, measured against an overall cost to Eutelsat of an estimated €4 billion in terms of acquisition and investment.

The Eutelsat and OneWeb merger is on track to close during Q3.

Eutelsat CEO Eva Berneke told analysts that OneWeb was on track to reach annual revenues of $50 million by June this year and that its contracted backlog had risen from $670 million declared last October to $900 million now.

She added that Eutelsat was considering establishing a new legal structure for the merged business in order to solve the dilemma of the UK’s ‘golden share’ in OneWeb.

“We have an option, in the merger discussions with OneWeb, to have a part of Gen 2 [satellite fleet] outside the so-called golden share of the UK government, as long as it is a distinct customer requirement,” Berneke noted.

There has been much focus on the decline in revenues for Eutelsat’s Broadcast division. On May 11th, Eutelsat reported an overall decline in revenues of 7 per cent with its Broadcast division falling back (y-o-y) of 9.3 per cent to €157 million. However, looking back at the historical record and it provides an object lesson in the decline in what was once Eutelsat’s core business.

Indeed, in less than two years Eutelsat has suffered a downturn in its Broadcast division from €177.6 million, to just €156.5 million in the most recent quarter-year. Or €20 million overall. Eutelsat blames some of this decline on the enforced sanctions on Russian, Iranian and other problem broadcasters as well as DTH cancellations from Digiturk.

Eutelsat’s quarterly Broadcast revenues:

2021-2022 Q1 €177.6m
2021-2022 Q2 €172.8m
2021-2022 Q3 €172.5m
2021-2022 Q4 €173.9m
2022-2023 Q1 €170.1m
2022-2023 Q2 €168.5m
2022-2023 Q3 €156.5m

As to the plan for absorbing OneWeb, Eutelsat says the OneWeb’s Gen-1 constellation is on track to reach global coverage by the end of this year, supporting a robust commercial ramp-up across key verticals with a $300 million increase in the order backlog since October 2022. This positive operational and commercial momentum underpins our expectations for the growth and value creation potential of the combined entity, with an estimated NPV of combined synergies exceeding €1.5 billion. The development of Gen-2 is set to begin in 2024, unlocking significant additional value at an optimised cost.

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