British satellite business OneWeb is to merge with the French Eutelsat in a bid to create a global multi orbit satellite connectivity provider.

Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s eventual constellation of 648 Low Earth Orbit satellites.

The partners said the transaction builds on the deepening collaboration between Eutelsat and OneWeb, begun with the 23% equity stake acquired by Eutelsat in OneWeb last April, the global distribution agreement between Eutelsat and OneWeb announced this March, and the new exclusive commercial partnership, addressing mainly the European and global cruise markets,

The transaction would be structured as an exchange of OneWeb shares by its shareholders (other than Eutelsat) with new shares issued by Eutelsat, such that, at closing, Eutelsat would own 100% of OneWeb excluding the ‘Special Share’ of the UK Government. OneWeb shareholders would receive 230 million newly issued Eutelsat shares representing 50% of the enlarged share capital.

Commenting on the merger, Dominique D’Hinnin, Eutelsat’s chairman said: “Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in connectivity, and deliver to our customers solutions to their needs across an even wider range of applications. This combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile. In addition, the combination carries significant value creation potential, anchored on a balanced mix of revenue, cost and capex synergies. The strong support of strategic shareholders of both parties is a testament to the huge opportunity that this combination offers and the value that will be created for all its stakeholders. This is truly a game changer for our industry.”

Sunil Bharti Mittal, OneWeb’s executive chairman added: “The positive early results of our service together with our strong pipeline represent a very exciting opportunity in the fast-growing satellite connectivity segment, especially for customers requiring a high speed, low latency experience. Our customers are actively seeking a combined GEO/LEO offering leading us towards this important step. Bharti, as the lead shareholder of OneWeb, along with other key shareholders, is looking forward to playing a meaningful role in providing expanded connectivity through the combination of OneWeb and Eutelsat.”

Eutelsat and OneWeb said they would target the considerable opportunities available in the connectivity market, driven by consumer and business demand for consistent, reliable connectivity which is forecast to grow by three and five times respectively over the next decade, to reach a combined value of circa $16bn by 2030.