Satellite startup OneWeb’s last decade has been a space opera. Founded by an American entrepreneur and headquartered in London, it has partnered with Google and Elon Musk, supplied Arianespace, attracted investment from Hughes Network Systems and SoftBank Group, and went bankrupt. After this the UK government and India’s Bharti Global saved it.
The next act has all the signs of a post-Brexit moonshine for Europe’s wartime economy. France’s 50-50 merger with Eutelsat Communications SA announced, will create a European champion to be liked musk SpaceX and of amazon Project Kuiper.
This step is incomplete and in a way inevitable.
shareholders of Eutelsat, 20 percent owned by a French state investment firm, has good reason to feel hurt by the terms and timing. On Monday, the company’s stock fell by 17.8 percent, which is a sign of of oneweb Decrease in sales and future spending requirements will lead to reduction in income. As Bloomberg Intelligence analyst John Davis put it, a “merger of par” would see OneWeb benefiting more than cash-generating Eutelsat.
But given the risk of Eutelsat being dropped on the launchpad by rivals, it also makes strategic sense.
Eutelsat has long relied on reliable cash flow but traditional satellite TV revenue has declined. According to Bloomberg data, the group’s sales have fallen from around 1.5 billion euros (about Rs 12,150 crore) in 2016 to 1.2 billion euros (about Rs 9,700 crore) last year. Meanwhile, Musk has estimated annual revenue of $50 billion (about Rs 3,99,530 crore) in its lower orbit. starlink The venture, which is causing concern in Europe as its rollout picks up pace. According to a report by think-tank IFRI, investment in European space startups reached 610 million euros (about Rs 4,940 crore) in 2021, which is a fraction of $5 billion (about Rs 40,510 crore) invested in US companies in 2020. is part.
Diversifying into lower orbit satellites means more exposure and more capital expenditure for Eutelsat – a series of such projects have gone bankrupt in the past (including OneWeb). But it also brings an opportunity to tap into the high demand for their faster speeds and higher power in sectors such as telecommunications. And in a wartime economy, it promises to bring more expertise in data and cybersecurity, as well as a bigger role for Europe in space – something dear to Macron’s heart.
There is no doubt that it may be easier and easier for shareholders to imagine an acquisition by Altice billionaire Patrick Drahey, whose EUR-2.8 billion (about Rs 22,690 crore) vision was rejected, or a merger with rival SES. which offered cost savings. Yet Drahi’s bid seemed opportunistic, lacking a clear fit with his telecom empire, while SES would have triggered its fair share of mistrust and national-security concerns.
There are a lot of details that still look unclear. Governance of the joint entity would require political cooperation between governments that also cannot agree on fishing rights in the wake of Brexit. Financially, it’s unclear how much it would cost to compete against Big Tech’s billionaires; When Eutelsat first invested in OneWeb last year, management called it an “ideal” entry point because $5 billion (about Rs 39,950 crore) had already been invested.
Overall, however, the scheme looks like a microcosm of the current geopolitical environment – and the kind of corporate strategies that are getting a cold reception in the stock market. What once was a credible, cash-guzzling defensive game has now morphed into a cash-guzzling competitor in a strategic sector dominated by America’s big spenders, it’s not the kind of story that a lot of shareholders will enjoy. want to hear.
Yet aiming for the stars is what it can take to avoid Europe being dropped on the launchpad.
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