Eutelsat plummets on confirmed merger talks with peer OneWeb

Telesat

25/07/2022 08:58

** Shares in satellite operator Eutelsat  ETL.PA  slump
about 14% as it confirms reports of talks about potential merger
with British rival OneWeb, of which it already owns 23%
 urn:newsml:reuters.com:*:nL8N2Z61CM  urn:newsml:reuters.com:*:nL1N2Z5054
    ** Shares, sitting firmly at the bottom of France's SBF 120
 .SBF120  index, are on track for their worst day in almost four
years
    ** The deal, expected to strengthen both companies in
low-orbit satellites race, would value OneWeb at about $3 bln,
Credit Suisse says, adding Eutelsat currently trades at EV of
$5.4 bln  
    ** CS is slightly surprised by the potential deal as it
expected OneWeb to stay separate until it generates some
revenues
    ** "For the moment, we don't have any sort of business plan
for this constellation that is barely starting its operations at
present," Aleksander Peterc from Societe Generale says
    ** The deal is likely to be scrutinised heavily, CS adds,
and will likely need political consensus from both the UK and EU
    ** "The 1.1Tbps of capacity available on OneWeb Gen 1 is
underpowered versus Starlink and other constellations being
planned by Amazon  AMZN.O  and Telesat  TSAT.TO ," CS says,
adding it's "critical" for OneWeb to invest in Gen 2
constellation
    ** With no debt but also no revenues, OneWeb likely needs
the cash from Eutelsat, CS adds
    ** Eutelsat says that under the terms of the discussed deal,
ownership would be split 50-50 with OneWeb  urn:newsml:reuters.com:*:nASM000KIJ
    ** "It would appear that Eutelsat's core business is being
valued at less than OneWeb," CS says on ownership split

($1 = 0.9810 euros)

 (Reporting by Piotr Lipinski)
 ((piotr.lipinski@tr.com))