Major shareholders of French satellite operator Eutelsat and Bharti-backed OneWeb have entered into an agreement to merge all the shares, according to a statement on Tuesday.
After the close of the deal, Bharti Group will be the largest shareholder of Eutelsat.
According to a joint statement, OneWeb has a transaction value of $3.4 billion (over ₹27,000 crore). Eutelsat will add to its strong fleet of 36 Geostationary Orbit (GEO) satellites with OneWeb’s group of 648 Low Earth Orbit satellites, of which 428 are currently in orbit.
The announcement also has a takeaway for the Indian market, where OneWeb received a letter of intent from the DoT for a GMPCS (Global Mobile Personal Communication by Satellite) license.
Earlier this year, OneWeb entered into an agreement with the commercial arm of the Indian Space Research Organization (ISRO) to launch satellites.
“With its uniquely superior GEO/LEO offerings, complementing high throughput with low latency, the combined entity will help enhance the country’s satellite communications capabilities, meeting the diverse needs of private industry as well as government. does,” the companies said.
At a time when Indian space policy is under consideration, the new entity will give further impetus to the recently signed Agreement on Space Coordination between India and France.
He said, “As the largest shareholder in the combined entity, Bharti will continue its entire interest in OneWeb through Eutelsat. Sunil Bharti Mittal will be the co-chairman of the joint listed entity and Shravan Bharti Mittal will be the second Bharti director. “
However, he did not give details of Bharti Group’s specific holdings after the deal-closing.
OneWeb India will also become a subsidiary of Eutelsat JV following the FDI approval, “and is confident of furthering the vision of a digitally connected India, with its unique capabilities to cover all unconnected white spaces”.
The companies said that Eutelsat and OneWeb’s operations were highly complementary. Over time a clear roadmap was drawn up to develop a complementary GEO/LEO service including a shared platform, hybrid terminal and fully interconnected network.
Low Earth Orbit or LEO satellites are located closer to the Earth as compared to GEO satellites. The LEO fleet of satellites constantly orbits the Earth and is not stationary at a single point like GEO satellites.
Dominic D’Hignin will be proposed as the President of the Joint Unit and Sunil Bharti Mittal as Co-Chairman (Vice President). Eva Bernecke will continue as CEO of the combined entity.
“The transaction will be structured as an exchange of OneWeb shares by its shareholders (other than Eutelsat) with new shares issued by Eutelsat, such that, upon closure, Eutelsat will own 100% of OneWeb ( excluding the ‘special share’ of the UK Government),” the firms said in the statement.
Eutelsat holds a 23 per cent stake in OneWeb.
OneWeb shareholders will receive 230 million freshly issued Eutelsat shares representing 50% of the increased share capital.
Therefore, Eutelsat shareholder and OneWeb shareholder will each hold 50% of Eutelsat’s shares.
The transaction, which is subject to regulatory approval, is expected to close by the end of the first half of 2023.
“Representing a transformational transaction, built on the strong foundation established in April 2021, this combination, along with Eutelsat’s initial investment in OneWeb, creates a global leader looking to capture the connectivity market with a complementary GEO/LEO offering. specially positioned for it,” it said.
The combination delivers a “compelling” financial profile with “double-digit potential” revenue and EBITDA (earnings before interest, taxes, depreciation and amortization growth) compounded annual growth rates over the medium to long term.
“…the potential incremental value-creation of over €1.5 billion stems from post-tax (net of implementation costs) revenue, capex and cost synergies,” he said.
A balanced board and governance structure would include the Chairman of Eutelsat and its CEO, the Chairman of OneWeb, and a significant number of independent directors, proposed by the shareholders of Eutelsat and OneWeb, at its Extraordinary General Meeting.
Eutelsat will continue to be listed on Euronext Paris and will have to apply for entry into the standard listing on the London Stock Exchange.
OneWeb Executive Chairman Sunil Bharti Mittal said he is “excited” about the prospects of adding the unaffiliated.
“The combination of Eutelsat and OneWeb represents a significant development in that direction as well as a unique GEO/LEO combination.
Mittal said, “The positive early results of our service along with our strong pipeline represent a very exciting opportunity in the rapidly growing satellite connectivity segment, especially for customers who require a high-speed, low-latency experience “
He added: “Our customers are actively seeking a joint GEO/LEO offering that will lead us on this important step”.
Trading under its current name, OneWeb will continue to operate the LEO business, with OneWeb headquartered in the UK
Eutelsat will continue to be headquartered and domiciled in France.