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UK Gov Sees Value of Stake in OneWeb Satellite Broadband Firm Halved

Wednesday, Dec 27th, 2023 (8:48 am) - Score 4,280
OneWeb-Eutelsat-LEO-Satellites-in-Orbit

The tumbling share price of European satellite operator Eutelsat has effectively more than halved the value of the UK Government’s associated stake in OneWeb (currently worth c.£200m). The operator is now facing more pressure to secure a key EU satellite broadband contract, which won’t be easy due to.. politics.

OneWeb (Eutelsat OneWeb) currently has 634 of their small (c.150kg) first generation (GEN1) Low Earth Orbit (LEO) platforms in space – orbiting at an altitude of 1,200km above the Earth (588 of them for coverage and the rest for redundancy). The network was technically completed in March 2023 (here) and promises both ultrafast speeds and fast latency times.

NOTE: ISP BT is currently working with OneWeb on a UK rural broadband trial (here and here).

Just to recap. Eutelsat formally completed the acquisition of OneWeb in September 2023. Under the agreement, Eutelsat will remain headquartered in Paris, while OneWeb will be a subsidiary operating commercially as Eutelsat OneWeb with its centre of operations remaining in London. Eutelsat currently remains listed on the Euronext Paris Stock Exchange and has applied for standard listing on the London Stock Exchange (LSE).

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The merger was intended to help Eutelsat enter the new market for LEO based broadband satellites, which is an area that has thus far been dominated by Starlink. By comparison, OneWeb saw the deal as being a way of potentially helping them to fund and start delivering their next (second) generation of satellites in a couple of years’ time.

The problem is that Eutelsat’s share price has lost about a quarter of its value in just the past three months, which according to the Telegraph (paywall) now values the UK government’s remaining stake in the French company via OneWeb at around €225m (£195m) – roughly less than half of what they originally invested several years ago. But as a spokesperson for the government said: “Share prices fluctuate in the short term but this was a long-term investment.”

As usual, there are a number of reasons for Eutelsat’s dismal performance. Firstly, the company was already under pressure from Starlink, but the OneWeb deal could only ever help to mitigate that by so much (it’s a much smaller network) and investors were uneasy about the cost of the deal. OneWeb will also need billions more in the future to deploy its second generation of satellites, but high interest rates make that much more expensive.

NOTE: OneWeb has plans to launch another 1,280 satellites in the future (funds allowing), which are expected to reflect a GEN2 model that could sit in a higher Medium Earth Orbit (MEO) of 8,500km. The GEN2s are widely expected to have more data capacity, support for 5G mobile and may, possibly, introduce enhanced navigation and positioning features.

In addition, Eutelsat’s debt was recently (November 2023) downgraded by Fitch due to “significantly increased execution and free cash flow risks“. The satellite operator is still hoping to tackle some of this by bidding on the EU’s own LEO network project, which is intended to provide an alternative to dependence upon Elon Musk’s Starlink (SpaceX).

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The problem is that EU leaders are known to be wary of such a bid because the UK government still retains veto powers over certain business deals via a golden share, which is applicable to specific points relating to national security, IP and changes to the nature and scope of OneWeb’s business. For example, this means the government could veto a decision to shift OneWeb’s HQ out of the UK or any sale of business to a hostile state (any changes to key UK suppliers of the OneWeb network might similarly throw up some issues).

The UK Government has also previously hinted that OneWeb’s future GEN2 satellites could introduce enhanced navigation and positioning features, which is something they’ve long perceived as necessary due to being unable to stay a member of the Galileo project – Europe’s Global Navigation Satellite System (GNSS). But it remains unclear whether OneWeb’s second generation satellites will actually deliver this, assuming they do eventually get off the ground.

Suffice to say that 2024 is going to be a very interesting year, although a quick look at Eutelsat’s historical trends over the past 5 years does rather suggest that things have been going downward a lot more than upward.

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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13 Responses
  1. Avatar photo Roger G says:

    Typical.

  2. Avatar photo Spaffed up the wall says:

    The retreat from Bodger and Barnard Castle’s £500m “wrong satellites” wasteful folly continues unabashed.

    Soon the fanciful Brexit dreams of OneWeb replacing Galileo will too be quietly flung onto the ash heap, joining all the other Brexit unicorns, which turned-out to be nothing but mangey lame donkeys with traffic cones gaffer taped to their foreheads.

    Bodger’s legacy is one of abject failure… more fool those who fell for it!

    1. Avatar photo Cheesemp says:

      The joys of populist politics – if we just do X everything will be better. Country does X and nothing improves (or in fact gets worse) so they start blaming everything else not admitting they had lied/made it all up on the back of a fag packet.

      I suspect the 1gb fiber promises will equally fail soon.

      I still one day hope the general populace will start understanding no fix is going to be easy/simple but that seems to be the increasing trend (hence more populists).

    2. Avatar photo aled says:

      TBH, I kinda assumed the proliferation of drone warfare was behind the rise of space internet satellites. The ongoing relevance of Starlink to the Ukraine conflict is eye opening

  3. Avatar photo John says:

    Halving is not enough, it should be zero

    1. Mark-Jackson Mark Jackson says:

      As a taxpayer, I’d rather it wasn’t zero.

    2. Avatar photo John lover says:

      John says: “if it smells of foreign investment, burn it with FIRE” . Maybe he should shag Susan Hall and really put the world to rights.

    3. Avatar photo MattP79 says:

      To be fair Mark, as a tax payer (and Council Tax payer in Thurrock…(!)) I would prefer the government hadn’t made an irresponsible “investment”. There was no need to buy-in to a failed satellite company and the only rational was to cock-a-snook at the EU. The touted alternative to Galileo hasn’t materialised and is unlikely to. UKSBAS? Lol.

      At least if the OneWeb had failed we could draw a line under the loss and not worry the government would throw more of our money at it.

    4. Mark-Jackson Mark Jackson says:

      Absolutely fair point Matt, but the fact is that they did, hence again.. I’d rather it wasn’t zero.

  4. Avatar photo XGS says:

    Annoying loss of money and may be temporary but either way mere pennies compared with the incredible wastage and looting of the taxpayer over the past decade.

  5. Avatar photo Ethel Prunehat says:

    Headline is misleading. The value of the stake may have halved, but the stake hasn’t. The UK government’s shareholding has not been diluted [this time] and they didn’t sell anything.

  6. Avatar photo Chris says:

    Anyone actually able to use oneweb for connectivity?

  7. Avatar photo Anon says:

    Line must go up

Comments are closed

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