Eutelsat and OneWeb share financials supporting the planned merger

TAMPA, Fla. — Eutelsat would nearly double its annual sales over five years to about $2 billion if its merger with OneWeb is approved, the satellite operators said Oct. 12 as they unveiled the financials underpinning their multi-orbit agreement.

UK-based OneWeb’s non-geostationary network (NGSO) is key to competing in a satellite connectivity market that is forecast to more than triple to $16 billion by 2030, according to Eutelsat CEO Eva Berneke.

said Bernecke about half of this future The market will be captured by the NGSO sector, where it believes OneWeb’s low-latency services will have an advantage, leveraging Eutelsat’s higher bandwidth geostationary orbit (GEO) satellites.

Eutelsat announced plans in July to take over OneWeb in an all-share transaction that values ​​the British startup at $3.4 billion.

French investment bank Bpifrance and other top shareholders of listed Eutelsat have voiced their support for the deal, along with OneWeb shareholders such as Bharti, SoftBank, Hanwha and the UK government.

However, the transaction requires permission from foreign investment authorities and other regulatory bodies, in addition to a vote by Eutelsat shareholders to be held in the first half of next year.

OneWeb Finance

OneWeb CEO Neil Masterson expects the startup to record $50 million in revenue for the 12 months to June 30 – the end of Eutelsat’s 2023 financial year – following the recent launch of commercial services.

The startup is the world’s second-largest satellite operator behind SpaceX’s Starlink NGSO broadband constellation and has 428 of a planned 648 satellites in orbit, enough to provide coverage in the upper part of the northern hemisphere.

Masterson said OneWeb is set to deploy its remaining satellites in half a year after the restart the suspended launch campaign later this month. Global services are expected to launch commercially in 15 months.

According to OneWeb, it has made $21 million in North American sales to date.

Following the launch of global services, OneWeb expects to book between $150 million and $250 million for Eutelsat’s 2024 financial year.

Revenue is expected to be between $300 million and $500 million next year and top $600 million the following year.

The NGSO operator has signed contracts with customers worth nearly $700 million, Masterson said, which includes $275 million in commercial partnerships with Eutelsat.

Materson also pointed out that a “risk-weighted pipeline” of $1.9 billion of potential deals in the enterprise, government, aviation and shipping markets with more than 150 clients is in progress.

OneWeb has invested heavily to develop a constellation that is estimated to cost a total of $5 billion, though its current shareholders have only provided about $2.7 billion of that since taking ownership after bankruptcy in 2020.

Srikanth Balachandran, OneWeb’s chief financial officer, said the provider will go through a final 500 million dollars the next 12 months to cover the constellation”the remaining cost.

He estimated that OneWeb has lost $198 million over the past 12 months in EBITDA, or earnings before interest, taxes, depreciation and amortization.

The operator expects to break even at EBITDA by the end of June 2025.

Eutelsat connectivity development

Eutelsat expects the combined company to generate about $1.2 billion for the 2023 fiscal year ending June 30, and then grow by double-digits annually to about $2 billion for the 2027 fiscal year.

Combined EBITDA will outpace revenue growth, the company said, rising from about $700 million in fiscal 2023 to about $1.4 billion in fiscal 2027.

The companies expect to realize approximately $150 million in average annual revenue synergies four years after the deal closes by integrating services and products, including future hybrid terminals that will connect to both constellations.

They said Eutelsat’s expertise and resources will also accelerate the commercial launch of OneWeb and the enhancement of its services worldwide.

Five years after the deal closes, the operators expect to realize an average of $80 million in pre-tax cost synergies annually by avoiding duplication of effort. That includes staff, though the companies said no layoffs are needed to meet that goal.

Eutelsat and OneWeb also expect about $80 million in average annual capital expenditure synergies from the first year of their merger as they streamline their future satellite fleets.

Have already started working on programming the second-generation constellation of the NGSO operator, which is expected to cost $4 billion and be operational by early 2028.

Eutelsat already owns 23% of OneWeb after building a stake in the business to boost connectivity services amid the gradual decline of its legacy satellite TV business.

The French company said during financial results published on October 12 that it was extending its no-dividend policy for another 12 months to three financial years to support investment.

The company reported 287 million euros ($279 million) for the quarter to the end of September, down 4.5 percent from the same period last year on a like-for-like basis when adjusted for exchange rates.

Broadcast revenue fell by 7.4% to €170 million. Fixed broadband and mobile sales jumped 21.1% and 31.4%, respectively, to around €19m and €26m.

Eutelsat reported revenue of 1.15 billion euros for the year to the end of June, down 6.7% compared with the previous period.

Berneke said Eutelsat and OneWeb have submitted most of the applications needed to get the deal approved by regulators and are expected to secure permission for the merger in five to six months.

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