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Paris – Eutelsat It is one of the world’s largest satellite companies, but it has faced falling revenues in its traditional business as it grapples with a massive acquisition and faces turmoil from billionaires Elon Musk and Jeff Bezos.
Eutelsat CEO Eva Berneke is betting on this massive acquisition of a British company called OneWeb to change the company’s fortunes.
“OneWeb is the big bet,” Bernick told CNBC in an interview this week at the VivaTech conference in Paris.
Eutelsat makes most of its money from satellites, which provide connection to broadcast operations such as television networks. But that revenue is slowly declining. These so-called geostationary or GEO satellites are what Eutelsat specializes in.
OneWeb, a British company, specializes in so-called low Earth orbit, or LEO, satellites, which are used for things like connecting to the Internet.
By combining Eutelsat’s legacy GEO work with OneWeb’s LEO work, Berneke feels it could be a huge advantage.
“(What) OneWeb brings is a low orbital constellation, a little bit like Starlink, where we can then start integrating the two networks with the GEO plus LEO network,” Bernick said.
OneWeb, a direct competitor to Elon Musk’s Starlink, which included Japanese giant SoftBank among its investors, filed for bankruptcy in 2020. The UK government at the time invested in the company to save it. Eutelsat announced last year that it would acquire OneWeb.
Starlink aims to create a constellation of satellites that provide internet connectivity on Earth.
shareholder opposition
Over the past year, Eutelsat shares have fallen by almost 50% due to major changes that have taken place in the company. Eutelsat suspended its dividend last year to focus on investing in OneWeb and its new satellites, known as “Gen 2”.
Bernick admits this has upset shareholders but there are new investors getting into the stock.
“We’ve seen some pushback from shareholders. And that relates to some big change. Eutelsat used to be a company that delivered very high dividends with very stable cash flow, but not a lot of growth. And what we’re telling them now is that with this merger, we’re going to be a high-growth company, Bernie said.
“We’re going to stop paying any dividends. And they should see that the returns will come back once we’ve paid 4 billion (euro) for the second generation (satellites). So that’s 180 degrees, which means that a lot of, especially the shareholders out there who loved the annual dividend, They say, “Well, maybe we’ll take our retirement money somewhere else and go over there.”
Bernick revealed to CNBC that the company plans to double-list on the London Stock Exchange once the OneWeb deal closes.
Elon Musk is shaking up the market
Part of Eutelsat’s hope with OneWeb is that it will help the company compete with Musk’s Starlink as well as Jeff Bezos and Amazon’s efforts with Project Kuiper. The latter is also trying to launch satellites to go online.
“We just have the biggest innovators in the business come in and say, ‘Oh, this is an interesting space, I can do something here.'” I can actually manufacture this place. “And I think that’s what Elon Musk needs to take a lot of credit for doing, which is really changing that,” Bernick admitted.
Many of Eutelsat’s shareholders see the acquisition of OneWeb as a risk. But Bernick said Musk has changed the way companies think about risk.
“Elon Musk is changing the way we think about risk broadly in business, and I think one of the great things he’s willing to do is put his money behind risk and move forward quickly,” Berrinke said.
“One of the things we need to start doing is taking calculated risks, but also be able to move forward very quickly and learn from those risks.”
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