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It’s been billed as the billionaire space race, Elon Musk’s SpaceX versus Jeff Bezos’s Project Kuiper. Both want to deliver high-speed internet services from space. But other players are making moves to strengthen their positions in a market that’s expected to quadruple in size by 2030.
French satellite group Eutelsat and the scrappy British space-based internet pioneer OneWeb are joining forces with the aim of creating a European champion able to compete with the likes of Musk and Bezos. The two companies say the merger will allow them to offer space connectivity for everything from cruise ships to rural areas by combining Eutelsat’s 36 geostationary satellites with OneWeb’s constellation of 648 in low earth orbit.
But maintaining and expanding this network requires cash and lots of it, which is why Eutelsat has said it will suspend its dividend for two years in order to invest in improving OneWeb’s satellites. But that’s riled Eutelsat’s shareholders, who like the company’s track record of cash generation. Shares in Eutelsat tumbled more than 30 per cent when the so-called merger of equals was announced. And CEO Eva Berneke was forced to admit that the deal marked a big change for a company prized for its dividends.
But this deal isn’t just about squaring up to American billionaires. It could mark an easing of political relations between London and Paris after years of turbulence over Brexit. The British government is a major shareholder in OneWeb. Westminster has an 18 per cent stake after it bailed Oneweb out of bankruptcy to the tune of $500mn in 2020.
The French government meanwhile owns a 20 per cent stake in Eutelsat, with China’s sovereign wealth fund owning another 5 per cent. Once the deal goes through the French and UK governments will own a 10 per cent and 11 per cent stake in the new group, respectively. But the UK government will also have some special rights over OneWeb.
The new space race is as much about national pride as well as generating money. The deal is expected to close in six to nine months, but competing with the satellite heavyweights will take much more time and investment.