The European Commission remained very cautious on Monday 25 July in the light of announcements by the European Telecommunications Satellite Organisation (Eutelsat) regarding its merger with the private British telecommunications company OneWeb.
“It is not for the Commission to comment on this transaction. But what matters is not so much the share of the shareholders, but who has control over the final decision-making structure”, said an internal source in the European Commission.
The EU institution had questioned Eutelsat’s participation in the Indo-British constellation project in 2021, while at the same time the company was taking part in the preparatory work for the EU constellation for secure connectivity (see EUROPE 12727/11). In any case, it was reassuring that “the European constellation project under negotiation is progressing at a very good pace”, referring to the negotiations among the co-legislators (see EUROPE 12998/21).
On the morning of Monday 25 July, Eutelsat confirmed “recent rumours” about a merger between the two companies in a statement. The objective would be to create a world leader in connectivity with GEO (geostationary orbit)/LEO (low earth orbit) activities and thereby position itself in a “booming” market.
“OneWeb is one of the two only global LEO networks and has experienced strong momentum over recent months, with service expected to be fully deployed in 2023”, according to the statement. The transaction represents “a logical step” in the “successful” partnership, according to Eutelsat, which began with Eutelsat’s equity investment in OneWeb in April 2021 (see EUROPE 12787/22) and deepened with the global distribution agreement announced in March 2022.
Eutelsat currently holds a 23% stake in OneWeb, alongside a consortium of public and private investors. Under the terms of the deal currently under discussion, the shareholders of Eutelsat and OneWeb would each hold 50% of the shares of the combined group.
Christophe Grudler, the MEP who is rapporteur for the constellation project (see EUROPE 12968/13), assured EUROPE that in any event, Eutelsat will be able to participate in the European constellation consortium, “but without OneWeb”. He added that he wanted to remain cautious until the end of the transactions.
Another European source said that the OneWeb technology is 10 years old and “does not seem to be very suitable for the constellations of tomorrow”. “There should be doubts in the markets”, the source said.
Immediately after the announcement, Eutelsat’s share price fell by 17% on the stock markets, to €8.7. (Original version in French by Pascal Hansens)