OneWeb, the British satellite firm rescued by the UK taxpayer, has agreed a merger with French rival Eutelsat to create a “global player” in space-based internet connectivity.
It was announced that the all-share combination would value OneWeb at $3.4bn (£2.8bn) – structured as an exchange of OneWeb shares by its shareholders, including the UK government, with new shares issued by Eutelsat.
The Department for Business, Energy & Industrial Strategy (BEIS) said it meant the taxpayer would now have a “significant stake in what will become a single, powerful, global space company.”
It expressed support for the tie-up despite the threat of complications arising from Chinese interest in Eutelsat – a potential national security concern that earlier this month saw a UK/China tech deal being blocked under new powers for the first time.
BEIS said that under the terms the “UK government will retain the special share and its exclusive rights over OneWeb – securing the company’s future at the centre of the combined group’s global LEO (low earth orbit) business, national security controls over the network, and first-preference rights over domestic industrial opportunities.”
OneWeb was rescued from bankruptcy proceedings in the US at the height of the COVID pandemic through a £400m taxpayer bailout.
It was seen by the government as a crucial communications investment at that time, spearheaded by Boris Johnson on the advice of his then-senior adviser Dominic Cummings.
The deal – subject to national security and Eutelsat shareholder clearances – will see OneWeb’s headquarters remain in the UK, with France-listed Eutelsat applying for admission to the London Stock Exchange.
It would see the pair combine a complicated set of owners, which also includes Indian telecoms billionaire Sunil Bharti Mittal on OneWeb’s side with Eutelsat’s investors.
They include entities owned by the French and Chinese states.
A deal would also combine the companies’ resources in the race to build a constellation of low-orbit satellites, placing them in competition with the likes of Elon Musk-owned SpaceX’s Starlink and Amazon’s Project Kuiper.
Eutelsat will add its 36-strong fleet of Geostationary Orbit (GEO) satellites to OneWeb’s LEO constellation, with 428 satellites already in orbit, to generate combined revenues of £1bn, the companies said.
OneWeb’s work has been compromised by the Russian invasion of Ukraine, as international sanctions now prevent the use of Russia-based satellite launches.