OneWeb, a Low Earth Orbit (LEO) satellite broadband provider, today announced it has received a $550m investment from Eutelsat, the third-largest satellite operator globally, giving Eutelsat a 24% stake in OneWeb. As part of the investment, Eutelsat becomes a leading shareholder of OneWeb, alongside the UK Government, Bharti Global, and SoftBank. Notably, in July 2020, the UK Government and Bharti Global each pledged to invest $500m in OneWeb’s satellite constellation build-out, following its emergence from bankruptcy.

Eutelsat’s 24% stake purchase in OneWeb will be paid in cash. Specifically, Eutelsat will finance this transaction through a combination of its cash on-hand, debt capacity, and $507m of proceeds received from the C-band spectrum auction. Additionally, Eutelsat will gain similar governance rights to the UK Government and Bharti Global, including representation on OneWeb’s board. Finally, the transaction is expected to close in the second-half of 2021.

Following completion of Eutelsat’s investment, OneWeb will have cumulatively raised $1.9bn in new equity financing. Indeed, the company has now secured 80% of the total financing required for its first-generation fleet, of which nearly 30% is already in space. Furthermore, OneWeb intends to secure its remaining funding needs during 2021.

OneWeb – LEO Satellite Constellation

OneWeb targets operating 648 satellites in orbit, through its LEO constellation, once it is fully deployed. In so doing, the company will be able to fulfill its goal of offering low-latency broadband connectivity globally. Indeed, this includes broadband services for some of the world’s most remote locations.

By the end of 2021, OneWeb’s first-generation satellites will offer significant regional coverage. Additionally, the company expects to achieve global coverage by 2022. In the future, OneWeb’s second-generation constellation will provide meaningful enhancements in terms of capacity, flexibility, and economics.

Ground-Based Components of OneWeb

Gateways (or Ground Stations)

OneWeb’s LEO satellite system leverages a global network of gateways (also known as ground stations), which are located on Earth and used to telecommunicate with satellites.

User Terminal

OneWeb offers a range of user terminals for different customer markets, which is typically a small satellite dish that sits outside the user’s home. The company’s goal is to ensure these user terminals are capable of delivering fast, high-bandwidth, and low-latency broadband services.

Latest Developments for OneWeb

In April 2021, OneWeb launched a further 36 satellites into space, bringing its system to 182 satellites.

Satellite Broadband Service – OneWeb

OneWeb will commercially launch its satellite broadband services later in 2021, following two more satellite launches. In turn, this will allow the company to start offering broadband services to the United Kingdom, Alaska, Northern Europe, Greenland, Iceland, the Artic Seas, and Canada. Moreover, OneWeb anticipates making global broadband services available in 2022.

Overall, OneWeb’s LEO satellite constellation will deliver 1.1 terabits per second of capacity, once all 648 satellites are in orbit. With this capacity, the company will use a wholesale business model to address the government, fixed data, and mobility markets. Under this business plan, OneWeb anticipates generating annual revenue of $1bn, within 3 to 5 years following the full deployment of its constellation.

SpaceX’s unit Starlink also offers LEO-based satellite broadband service and is by far the largest satellite broadband provider, making it the most significant competitive threat to OneWeb. Indeed, SpaceX’s Starlink has already started beta testing in Europe, with tests ongoing in the UK and Germany. Moreover, Starlink intends to roll-out its services to additional countries in Europe, in the near future.

Transaction Rationale – Eutelsat and OneWeb

Eutelsat’s investment in OneWeb is characterized as a partnership, whereby both companies will benefit from their complementary assets. For example, OneWeb has LEO satellites in close proximity to Earth, which extends the addressable market for Eutelsat’s Geostationary (GEO) satellite operations.

Customers – Eutelsat and OneWeb

Eutelsat brings to the OneWeb partnership its strong institutional and customer relationships (in particular governments and enterprise), technical expertise, and global geostationary fleet. At the same time, OneWeb delivers an ability to address multiple applications requiring low-latency and ubiquity through its LEO satellites. Furthermore, both companies will explore offering GEO/LEO satellite configurations for future service offerings.

Telecom Operators – Eutelsat and OneWeb

Eutelsat holds key relationships and support from a number of telecom operators in Europe, which OneWeb will benefit from. For example, the company has signed capacity deals in France and Italy, with Orange and TIM (Telecom Italia), respectively.

Eutelsat – Overview

Eutelsat is the third-largest satellite operator globally, behind Intelsat and SES. The company operates a fleet of 35+ Geostationary (GEO) satellites, providing coverage for Europe, Africa, the Middle East, Latin America, and parts of Asia.

Overall, Eutelsat offers services for i) broadcast, ii) broadband, iii) telecoms & data, and iv) mobile & maritime. Notably, the company has recently struggled to grow given the continued decline in its legacy video business. In turn, Eutelsat is increasingly pivoting its business towards broadband services, hence the investment in OneWeb.

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