Eutelsat/OneWeb Thought Unlikely to Raise US Regulatory Hackles

If Eutelsat and OneWeb move forward to combine, it likely won’t face big regulatory headwinds in the U.S., satellite experts told us. Eutelsat on Monday confirmed talks between the two. Under the deal's proposed terms, shareholders of each company would hold 50% of the combined group’s shares.

The proposed transaction "seems like a good fit," akin to SES' 2016 takeover of O3b, said Mintz space and satellite lawyer Sallye Clark. The proposed Eutelsat/OneWeb deal seems to be part of an ongoing trend of geostationary operators seeking to have their own non-geostationary orbit component, she said. A lawyer with satellite experience said from a U.S. perspective, any regulatory issues are mitigated by Eutelsat having a relatively small U.S. presence and OneWeb not being fully launched.

Whether the deal could face more regulatory pushback in the U.K. is an open question, emailed Marek Ziebart, space geodesy professor, University College London. “The concept of regulation is very weakly applied in the space domain, but now that commerce is becoming the fastest moving driver of development in space then it is likely that the companies forming these conglomerates on the planet surface will be subject to regulatory scrutiny,” he said. “That makes this development one to watch.”

Ziebart said more partnering between geostationary orbit (GEO) and low earth orbit (LEO) communications companies “seems inevitable, given the marriage of convenience such a partnering confers.” He said Blue Origin securing launch capacity via Arianespace “shows they are entering the race with a vengeance.”

A Eutelsat/OneWeb deal would create "the first multi-orbit satellite operator offering integrated GEO and LEO solutions and would be uniquely positioned" to address a satellite connectivity market estimated to be worth $16 billion by 2030, Eutelsat said Monday. It said OneWeb "is one of only two global LEO networks and has experienced strong momentum over recent months." OneWeb is expected to be fully deployed next year.

Eutelsat owns 23% of OneWeb, and its desire for control "comes as a mild surprise that is likely to shake up the satcom industry landscape at a time when competitive uncertainty is already riding high," Quilty Analytics said in a note. It said such a deal would give Eutelsat "a credible hybrid strategy" with SES/O3b being the only operator well positioned now to offer hybrid services. Intelsat, which made multiple overtures toward OneWeb, "will now need to consider other options in pursuit of a hybrid solution," it said. Quilty said it doesn't anticipate big antitrust issues, though the transaction "is likely to raise touchy national sovereignty concerns between the U.K. and French governments, which will both hold a stake in the combined company." It said Viasat/Inmarsat and Eutelsat/OneWeb deals could make Telesat, now facing bigger competitive challenges, a target for Intelsat or SES, or SES and Intelsat themselves could look to combine.