In a strategic move designed to solidify their presence in the fast-growing global space industry, British satellite firm OneWeb and French rival Eutelsat have finalized their all-share merger. This move comes amidst intensifying competition in the satellite communications sector, notably from Elon Musk’s Starlink. The newly formed entity, rebranded as Eutelsat OneWeb, aims to be a formidable competitor in the space communications arena.
The Merger: Combining Strengths
The merger sees OneWeb’s Low-Earth Orbit (LEO) satellites joining forces with Eutelsat’s Geostationary Orbit (GEO) satellites. This unique combination promises to offer customers a fully integrated, global connectivity solution. Eutelsat’s high-throughput GEO satellites provide network density, while OneWeb’s LEO constellation offers the benefit of low latency and ubiquitous coverage.
Market Potential: A Trillion-Dollar Industry
According to investment bank Morgan Stanley, the global space industry could be worth more than $1 trillion by 2040, up from the current estimate of $550 billion. Eutelsat’s shares saw a 3.5% rise following the announcement, reflecting investor confidence in the potential of this merger.
Target Markets: Focusing on Enterprise
Both companies have a strong focus on serving enterprise customers. Eutelsat counts major telecom operators like Telecom Italia, Orange, and Deutsche Telekom among its clients. OneWeb, too, has aimed its services at enterprise markets, similar to the trajectory Starlink has followed after initially focusing on consumers.
Corporate Structure and Leadership
Post-merger, the Eutelsat Group will maintain its headquarters in Paris, while OneWeb will continue operating in London under its new name, Eutelsat OneWeb. Eva Berneke, who was appointed as Eutelsat’s CEO in January 2022, will continue in her role. Neil Masterson, who has been leading OneWeb since November 2020, is expected to leave the group by the end of the year.
Investor Sentiments: Mixed Reactions
The merger has not been without its detractors. Some Eutelsat investors expressed concerns, primarily because the deal might lead to the cessation of dividend payments as the company focuses on growth investments. However, Eva Berneke defended the move as a “big bet” that transitions Eutelsat into a “high-growth company.”
Competition and Collaborations: The Starlink Factor
Elon Musk’s Starlink is making significant inroads in the sector, recently partnering with European satellite operator SES to provide services to cruise operators. This partnership highlights the growing commercial viability of space-based internet services, placing more pressure on new entrants like Eutelsat OneWeb to rapidly scale and innovate.
Future Prospects: Growth and Innovation
The combined entity expects a double-digit revenue Compound Annual Growth Rate (CAGR) over the medium to long term, aiming to reach approximately €2 billion in revenue by 2027. The merger is expected to open up new markets and applications, including Fixed Connectivity, Government Services, and Mobile Connectivity like Maritime and Inflight services.
Final Thoughts: An Era of Multi-Orbit Connectivity
The Eutelsat and OneWeb merger heralds a new era in space connectivity, combining GEO and LEO technologies to offer a unique blend of services. As both companies strive to close the digital divide, their merger could serve as a template for future collaborations in the burgeoning space industry. With a strengthened portfolio and a clear focus on enterprise markets, Eutelsat OneWeb is strategically positioned to be a global leader in space communications.
