Eutelsat and key OneWeb shareholders have signed a Memorandum of Understanding with the objective of creating a leading global player in Connectivity through the combination of both companies in an all-share transaction.
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Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s constellation of 648 Low Earth Orbit satellites, of which 428 are currently in orbit.
The transaction would be structured as an exchange of OneWeb shares by its shareholders (other than Eutelsat) with new shares issued by Eutelsat, such that, at closing, Eutelsat would own 100% of OneWeb (excluding the ‘Special Share’ of the UK Government).
OneWeb shareholders would receive 230 million newly issued Eutelsat shares representing 50% of the enlarged share capital.
Eutelsat and OneWeb will address the considerable Connectivity market opportunity, which is fueled by the growing needs of customers in both the B2B and B2C segments for consistent, reliable connectivity. These market segments are forecast to grow by three and five times respectively over the next decade, to reach a combined value of circa $16bn by 2030, with growth being served by both GEO HTS and LEO capacity6.
Moreover, the combination of the network density, compelling economics and high throughput of GEO with the low latency and ubiquity of LEO, creates the optimal solution to address an even wider range of customer needs, thereby expanding the addressable market.
Average annual revenue synergies are estimated at circa €150m after four years, with hybrid GEO/LEO offerings providing a premium service to customers as well as improving the fill rate.
Synergies from joining organizational forces are expected to generate annual run-rate savings of over €80m pre-tax after five years, mostly through cost duplication avoidance.
Capex optimization is expected to generate average savings estimated at circa €80m per annum, from year one. This would be achieved by leveraging the hybrid GEO/LEO satellite infrastructure and through the improved purchasing power of the combined entity.
These sources of incremental value creation represent a balanced split between revenues, costs and capex. Taken together they equate to a net present value of over €1.5bn after tax (net of implementation costs). ■