Eutelsat takes stake in OneWeb satellite service

In somewhat of a surprise move for the leading French operator, which has so far focused on delivering satellite TV services around the world, Eutelsat Communications has acquired a 24% equity stake in the controversial UK/Indian low Earth orbit (LEO) satellite service OneWeb.

Attempting to emulate Elon Musk’s Starlink project, OneWeb aims to implement a constellation of 650 LEO satellites with a network of global gateway stations and a range of user terminals to provide an affordable, fast, high-bandwidth and low-latency communications service, connected to internet of things (IoT) devices, and a pathway for mass adoption of 5G services. It is also the developer of a positioning system rivalling GPS and the EU’s Galileo satellite navigation systems.

After OneWeb filed for bankruptcy in the US in March 2020, the UK government and Bharti Global each committed $500m to raise OneWeb from the grave and deliver what would be the UK’s first sovereign space capability.

The service officially emerged from bankruptcy in December 2020, and Eutelsat is investing $550m in OneWeb, with closing expected in the second half of 2021 subject to regulatory authorisations. The deal will see Eutelsat become a leading shareholder of the company alongside the UK government and Bharti Global.

With much of its global network already deployed, the OneWeb constellation, which enjoys ITU-backed priority spectrum rights, will operate 648 satellites in LEO low latency.

The firm claims that its first generation of satellites will offer significant regional coverage by the end of 2021, reaching global coverage the following year.

OneWeb also claims that it will be the first complete non-geostationary constellation with truly global coverage, significantly ahead of competing projects, delivering 1.1Tbps of capacity addressing the government, fixed data and mobility markets.

Future plans include a second-generation constellation said to provide significant enhancements in terms of capacity, flexibility and economics.

OneWeb anticipates annual revenues of circa $1bn 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.

Commenting on the agreement, Eutelsat chief executive officer Rodolphe Belmer 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.”

Yet, from its first announcement, the OneWeb project has been the subject of doubt as to whether any commercial opportunities would be realised from OneWeb. In late July 2020, it was revealed that the decision to invest $500m, like Bharti Global, into the technically bankrupt company was taken against the advice of UK government advisers.

In September 2020, the UK Parliament’s Business, Energy and Industrial Strategy Committee heard expert evidence from the world of satellite communications, casting further doubt on the intrinsic value of the project for UK taxpayers.