Following the news that Eutelsat and OneWeb have agreed to merge their businesses;

Harry Boneham, Aerospace Analyst at GlobalData, a leading data and analytics company, offers his view:

“The deal may provide a lifeline for OneWeb, which was once a leader in commercial satellite constellations. Having since been overtaken by deep-pocketed firms such as Elon Musk’s Starlink and Jeff Bezos’ Project Kuiper, the deal could provide some much-needed funds to recover lost ground in the market.

“The deal also has political implications, bringing the UK, French and Chinese governments together as part owners of the merged firm. The French and Chinese government both hold shares in Eutelsat, 20% and 5% respectively, whilst the UK holds an 18% stake in OneWeb.

“Despite the positive tone of the UK government’s announcement of the merger, it is possible that the deal will lead to the UK selling its share. The UK made a hefty $500 million investment in 2020. However, some of the reasons given for the purchase, such as the use of OneWeb’s constellation for national security uses, raised eyebrows at the time as the satellites had not been designed for such a mission.

“Given the Chinese government’s involvement in Eutelsat, the national security use of the combined firm’s constellation by the UK government now seems an even more remote possibility. The acquisition was controversial, but the Chinese stake could provide the UK government with a politically expedient justification for backtracking on a costly acquisition and selling its share.

“Furthermore, long-term goals for the acquisition such as the deal providing stimulus for a domestic UK space industry have failed to be realized. Whilst the UK government still maintains that they hold first-preference rights over domestic industrial opportunities, OneWeb’s largest shareholder, Sunil Bharti Mittal, cast doubt on this in March 2022, when he said that the company could not guarantee that it will be able to manufacture in the UK.”