Bharti Group-backed OneWeb Ltd and Eutelsat Commutations SA signed a $3.4-billion merger on June 26, to create a global player that competes with Elon Musk's Starlink and Amazon's Kuiper.
The MoU was signed to address the potential satellite connectivity market for both B2B and B2C segments for reliable connectivity, and according to the press release by Department for Business, Energy & Industrial Strategy, United Kingdom, the combined segments are expected to reach a value of $16 billion by 2030.
The exchange of shares would take place such that, at closing, Eutelsat would own 100 percent of OneWeb’s shares, receiving 230 million newly-issued Eutelsat shares representing 50 percent of the enlarged share capital, and the UK government will continue to own a 'special share', giving it certain veto rights over strategic decisions such as the location of the firm’s headquarters.
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According to a joint statement released by the companies, Eutelsat will combine its 36-strong fleet of Geostationary (GEO) satellites with OneWeb’s constellation of 648 Low Earth Orbit (LEO) satellites, out of which 428 of these are already in orbit.
"This will also be the start of commercial satellites in India," said Eutelsat Chairman Dominique D'Hinnin, in the press release.
What are GEO and LEO satellites?
Low Earth Orbit (LEO) satellites are said to be the technology that can revolutionise global connectivity through internet connection and data transfer capabilities, even in the remotest of locations.
Broadband connections require an extensive track of underground cables, expansion of terrestrial infrastructure, underground fibre ducts, pole attachments, and tower construction for the cellular base station.
Hence, LEO satellites -- which orbit 2,000 kms above the earth's surface and can provide high speed connectivity -- are beneficial in places that where fibre cables are inaccessible.
Geostationary (GEO) satellites orbit 35,000 kms above the earth surface and can too provide internet connection to remote areas that cables find hard to reach. However, due to its vast distance above the earth, its data capacity is limited, in turn limiting the data speed and increasing the latency.
Unlike GEO satellites, LEO satellites are not stationary and can provide a faster community. They are even able enough to provide in-flight internet and maritime communication.
What does this GEO-LEO combination mean for the satellite connectivity market?
"This GEO-LEO combination represents an opportunity in the fast-growing satellite connectivity segment, especially for customers requiring a high speed, low latency experience," said OneWeb Chairman Sunil Bharti Mittal, in a press release.
Elon Musk's SpaceX has more than 2,500 satellites in orbit, and is already selling its broadband service directly to consumers in several markets around the world. OneWeb, on the other hand, has 428 LEO satellites currently in orbit, and is pursuing a B2B approach.
Eutelsat’s GEO satellites, which are higher altitude and thus higher latency, are better suited for things like weather forecasts and TV broadcasts. And OneWeb’s constellation of lower-altitude satellites are better for critical communications that require low-latency data transfers.
Combined, the companies may be better positioned to target both B2B and B2C spheres.
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