The merger of satellite operators Eutelsat and OneWeb, approved by shareholders on Thursday, marks the birth of a European giant in the race for Internet from space. The newly formed Eutelsat Group is set to challenge Elon Musk's Starlink, which has already established itself as one of the world's leading satellite Internet providers.
Following the merger, the combined company will retain its headquarters in Paris and continue to be listed on the Paris stock exchange. The all-share combination was initially announced in summer 2022, with OneWeb now operating as a subsidiary under the name Eutelsat OneWeb. Its center of operations will remain in London.
Eutelsat's pivot towards telecoms comes amid an estimated $16 billion market for high-speed space connectivity in low-Earth orbit by 2030. This technology is particularly beneficial for isolated regions lacking fiber optics. The company plans to combine its fleet of 36 Geostationary Orbit (GEO) satellites with OneWeb’s constellation of 648 Low Earth Orbit (LEO) satellites, 428 of which are currently in orbit.
The integrated GEO-LEO service is expected to open up new markets and applications for customers, including fixed connectivity (backhaul, corporate networks), government services, and mobile connectivity (maritime and inflight). The network is already active and is set to be globally operational by the end of 2023.
Dominique D'Hinnin, Chairman of the Board of Directors at Eutelsat Group, referred to the merger as an "historic moment for the satellite industry." He emphasized that they will be moving quickly to accelerate the growth of the combined business with the support of strategic shareholders.
Eva Berneke, Chief Executive Officer, added that Eutelsat Group is now the only GEO-LEO operator in satellite communications that can offer a ubiquitous connectivity service. She mentioned that global connectivity is an important and exciting challenge to deliver upon, and the merger has given them the scale, financial strength, and business proposition to capitalize on the significant opportunity.
The Eutelsat Group is expected to grow at a double-digit revenue Compound Annual Growth Rate (CAGR) over the medium to long-term, reaching around €2 billion in 2027. However, it will face stiff competition from established players like Starlink, which has already put nearly 3,600 satellites into orbit and serves more than two million customers. Other competitors include Amazon (NASDAQ:AMZN)'s constellation and China's Guowang constellation of 13,000 satellites. The European Union also launched its own constellation, Iris, in late November 2022.
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