Paris-based Eutelsat Communications has invested $550 million in OneWeb, a broadband satellite communications company acquired by a consortium of investors comprising the UK government and Sunil Mittal-led Bharti Global. The investment will take total funding in OneWeb to $1.9 billion.
In January, Japan’s SoftBank Group and Hughes Network Systems LLC had invested $400 million in OneWeb. The UK government and Bharti Global invested $500 million each to acquire OneWeb under a bankruptcy resolution process.
“This investment from one of the world’s most experienced and largest global operators is 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,” the company said in a statement on Tuesday.
As part of the transaction, Eutelsat, one of the world’s leading satellite operators, will acquire a 24% stake in OneWeb and similar governance rights to the UK government and Bharti Global. The investment is expected to be completed in the second half of 2021, and is subject to regulatory approvals.
OneWeb’s deal with Eutelsat will enhance the commercial potential of both the companies, enabling the Bharti Global-led firm to leverage the latter’s existing government and enterprise customer base.
Following the full deployment of its fleet of 648 Leo satellites, OneWeb is expected to give annual revenue of around $1 billion in year three or soon thereafter, with the help of its partnership-driven and wholesale business plan, the company said.
“We are delighted to welcome Eutelsat into the OneWeb family. As an open multi-national business, we are committed to serving the global needs of governments, businesses and communities across the world,” said Mittal, chairperson, Bharti Enterprises.
“We are excited to become a shareholder and partner in OneWeb in the run-up to its commercial launch later in the year and to participate in the substantial opportunity represented by the Leo segment within our industry. We are confident in OneWeb’s right-to-win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology,” said Rodolphe Belmer, chief executive, Eutelsat.
Investment banking firm UBS was the advisor to OneWeb for the deal.
OneWeb plans to start high-speed internet services in India by mid-2022.
In November, Mittal told Mint that OneWeb will boost rural broadband connectivity in India and other developing countries, including those in Africa.
For 5G wireless service, satellite network will play an important role as it will reach areas where fibre and radio airwaves cannot penetrate, Mittal said.
However, the cost of using a satellite network is the highest among the three mediums, and thus, fibre and spectrum will be the preferred modes of transmission of data wherever they will be available, he added.
OneWeb, based in the UK, filed for Chapter 11 bankruptcy at the end of March 2020 after failing to secure $2 billion financing from lead shareholder SoftBank.
The portfolio firms of Bharti Global and its subsidiaries include Bharti Airtel Ltd, OneWeb, Gleneagles and Hoxton Hotels, Emtel and Hike.
