Eutelsat makes major LEO commitment with OneWeb investment

Satellite operator Eutelsat is ready to make its LEO play. The company announced a $550 million investment in OneWeb, securing an approximately 24% stake. The deal brings OneWeb to $1.9 billion in fresh equity since its bankruptcy proceedings last year. OneWeb sees the investment from one of the world’s most experienced and largest global operators as “a vote of confidence in OneWeb and underscores the arrival of Low Earth Orbit (LEO) satellites into mainstream long-term growth planning for major operators.”

With the Eutelsat cash secured OneWeb now believes it has sufficient funding for 80% of its first generation fleet. And with this week’s successful launch of 36 more satellites nearly 30% of that initial constellation is already in orbit. OneWeb notes it is “well advanced in terms of securing its remaining funding needs this year.”

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With the investment OneWeb secures a stake approximately the same as that of the UK Government and Bharti, the two entities that combined to bring the operation out of bankruptcy in late 2020.

OneWeb CEO Neil Masterson sees Eutelsat as a great partner “thanks to our high level of complementarity in terms of technology, assets, addressable markets, geographic reach and institutional relationships.”

Similarly, Eutelsat CEO Rodolphe Belmer is optimistic about the “substantial opportunity represented by the non-geostationary segment within our industry.” Belmer continues, “OneWeb will become our main growth engine outside our broadcast and broadband applications, as we continue to maximize cash-flow extraction from our highly profitable heritage business and grow our fixed broadband vertical leveraging our geostationary assets.”

Read More: De-risking IFC with OneWeb’s new JetTalk terminal

OneWeb’s 648 LEO satellite fleet will deliver high-speed, low-latency global connectivity. Its partnership with Eutelsat, a global geostationary satellite operator, will enhance both companies’ commercial potential. The pair can take advantage of Eutelsat’s established commercial reach to governments and enterprise customers in addition to its strong institutional relationships, recognized technical expertise and global fleet. OneWeb’s ability to address multiple applications requiring low latency and ubiquity will also allow both companies to explore GEO/LEO configurations for future service integrations and packages.

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The OneWeb constellation aims to deliver 1.1 Tbps of capacity when fully online, addressing the government, fixed data, and mobility markets. The network will come online in phases. The company expects to deliver full coverage north of 50 degrees latitude later this year, before growing to a global footprint at the end of 2022.

Building the LEO/GEO hybrid

Combining that coverage with access to a solid GEO satellite portfolio allows the company to transition otherwise hesitant customers into the LEO offering. Ben Griffin, OneWeb’s VP Mobility, highlighted the value of that offering for customers last month, suggesting, “in the early years we’re going to try and defuse some of that perceived risk, even though we don’t see it as a risk. We still see an element of LEO/GEO interoperation whereby certain applications can be used on GEO or GEO could be there as a fallback.”

Griffin continued:

[W]e certainly see that that LEO will take over, over a period of time even and even in the LEO/MEO environment. But we see [GEO coexistence] as a fairly nice way to ease into the market for those people who are used to, and dependent on, having a level of GEO service, even if it’s kind of sub optimal…

We see it as a way of diluting that risk from [the airline’s] perspective and easing our way into the market. But as far as we’re concerned, LEO-only is more than capable, much more capacity and capability that anyone will ever need.

Read More: OneWeb shrinks constellation plans, expands funding

Plans also include a second-generation constellation that will provide significant enhancements in terms of capacity, flexibility and economics. The company anticipates annual revenues of circa $1 billion within three to five years following the full deployment of the constellation, with a partnership approach and profitable wholesale business model.

Eutelsat’s investment will come with similar governance rights to the UK Government and Bharti, including board representation. Closing is expected in H2 2021, subject to customary regulatory review.