Can Europe’s Largest Satellite Company Challenge Musk’s Starlink Project?
Can Europe’s Largest Satellite Company Challenge Musk’s Starlink Project?
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Can Europe’s Largest Satellite Company Challenge Musk’s Starlink Project?
Last week, French satellite company Eutelsat and its British counterpart OneWeb announced the completion of their merger, creating Europe’s largest satellite company, poised to compete more effectively with Elon Musk’s Starlink project.
In a joint statement, the two companies confirmed the consolidation of all shares, forming the new entity called Eutelsat Group.
he company’s headquarters and listing will continue to be in Paris, with plans to be listed on the London Stock Exchange.
Eutelsat anticipates that the new company’s revenue is set to grow at a double-digit compound annual rate over the medium to long term, reaching approximately €2 billion (approximately $2.11 billion) by 2027. Capital expenditures are projected to be around €725 million to €875 million annually between 2024 and 2030.
The positioning of the new company aims to become a global leader in space communications, leveraging the strengths of Eutelsat’s high-throughput geostationary orbit satellites (GEO) and OneWeb’s low Earth orbit satellites (LEO) to provide customers with low-latency and ubiquitous high-density networks.
Eva Berneke, CEO of Eutelsat Group, stated, “Eutelsat Group is the only GEO-LEO operator in the world capable of delivering ubiquitous connectivity services, making global interconnectivity a significant and exciting challenge. We can cater to a broader range of customer demands, and as we continue to innovate and develop next-generation satellite technology, we can create substantial value for customers and shareholders.”
Last July, the two companies announced their agreement to merge through an all-stock transaction to become Europe’s largest satellite company, with the intention of challenging Musk’s Starlink project and Amazon’s Kuiper plan.
Following the announcement, Eutelsat’s stock price briefly rose by 6%. However, Bryan Garnier analyst Thomas Coudry noted, “The stock price increase is negligible compared to the losses since the merger was announced.”
Since the initial merger announcement in July 2022, Eutelsat’s stock price has fallen by approximately 49.4%. Coudry pointed out that the merger has been painful for small shareholders, as the long-term investments required by OneWeb are expected to consume significant cash flow, with uncertain investment returns.
Some of Eutelsat’s investors had previously opposed the deal with OneWeb, as it could potentially halt dividend payments to shareholders while making substantial investments.
Meanwhile, competition among various participants in the multibillion-dollar space industry is heating up. Analysts at Morgan Stanley previously estimated that the global aerospace industry’s value will exceed $1 trillion by 2040, compared to its current value of approximately $550 billion.
