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Eutelsat Says Moving To Full Combination With UK's OneWeb

French satellite operator Eutelsat Communications (ETL), which has signed a Memorandum of Understanding with British communications network OneWeb for a potential combination, Wednesday said it is moving to the next level in the deal, with a full combination.

In July, Eutelsat and key OneWeb shareholders signed the MoU to combine the companies in an all-share deal, whereby the shareholders of each company will hold 50% of the Eutelsat shares.

As a combined entity, OneWeb and Eutelsat will work together on the conception of OneWeb's Gen 2 constellation, due to enter service by early 2028.

In its strategy update on the proposed combination, Eutelsat said the combination will accelerate the commercialisation of OneWeb's fleet as it enters the final stages of its global deployment.

The combination will generate substantial value, tapping into significant revenue, cost, and capex synergies.

Eutelsat projects average annual revenue synergies of around 150 million euros by year 4, thanks to the acceleration of OneWeb's commercial ramp-up, among others.

The combination will help to maximise capex savings through the early, joint design of OneWeb Gen 2 as part of a combined GEO/LEO infrastructure, delivering significant savings compared to any potential LEO new entrant.

As a follow-on constellation to Gen 1, Gen 2 is expected to benefit from the re-use of existing ground infrastructure, the know-how developed with Gen 1, and already secured priority filings, while also being designed as part of a broader GEO/LEO structure rather than a standalone entity.

The cost of Gen 2 will therefore be considerably lower than that of building a constellation from scratch.

Eutelsat had made an initial investment in OneWeb in April 2021.

The combined entity is expected to have revenues of around 1.2 billion euros for FY 2023. From this base, revenues are expected to grow at a double-digit revenue CAGR over the medium to long-term.

EBITDA for the combined entity is expected to grow at a double digit CAGR over the same period, outpacing revenues growth.

Eutelsat will suspend its dividend for the coming three fiscal years with cash flow focused on the deployment of the Gen 2 constellation while maintaining a strong balance sheet.

Eva Berneke, CEO of Eutelsat, and Neil Masterson, CEO of OneWeb, said, "...we are confident that moving to the next level, with a full combination, will ensure the potential of the GEO/LEO integration is fully realized, underpinned by compelling financial, strategic, and industrial logic."

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