PARIS — Eutelsat, one of the largest satellite companies globally, has been experiencing a decline in revenue from its traditional businesses amidst a significant acquisition and the disruptive presence of Elon Musk and Jeff Bezos.
Eutelsat CEO Eva Berneke believes that the acquisition of British firm OneWeb holds immense potential to turn the company’s fortunes around.
Berneke stated in an interview with CNBC at the VivaTech conference in Paris, “OneWeb is the big bet.”
While Eutelsat specializes in geostationary satellites (GEO) that provide connectivity to broadcast operations like TV networks, its revenue from this sector has been steadily declining. On the other hand, OneWeb specializes in low Earth orbit (LEO) satellites primarily used for internet connectivity.
Berneke envisions combining Eutelsat’s existing GEO business with OneWeb’s LEO business to gain a significant advantage in the market. “OneWeb brings a low orbit constellation, similar to Starlink, where we can combine the two networks with a GEO plus LEO network,” Berneke explained.
OneWeb, a competitor to Elon Musk’s Starlink, faced bankruptcy in 2020 but was saved through investments from the UK government. Eutelsat announced its plans to acquire OneWeb last year.
Starlink, Musk’s ambitious project, aims to create a satellite constellation providing internet connectivity worldwide.
Shareholder pushback
Over the past year, Eutelsat’s shares have declined by approximately 50% due to the significant changes happening within the company. In order to focus on investments in OneWeb and its new “Gen 2” satellites, Eutelsat suspended its dividend payment last year.
While this decision has upset some shareholders, Berneke acknowledges the entry of new investors into the stock. She stated, “We have received pushback from shareholders due to a significant change. Eutelsat used to be a company that paid high dividends with stable cash flow but minimal growth. With this merger, we are positioning ourselves as a high-growth company.”
Berneke further added, “We will stop paying dividends temporarily, but shareholders can expect returns once we have completed the 4 billion euro investment in Gen 2 satellites. This change of direction may prompt some shareholders who preferred annual dividends to withdraw their retirement savings.”
Berneke shared with CNBC that the company plans to have a dual listing on the London Stock Exchange once the OneWeb deal concludes.
Elon Musk shakes up the market
Eutelsat’s hope with the OneWeb acquisition is to compete with Elon Musk’s Starlink and Jeff Bezos’ Project Kuiper. Both initiatives focus on launching satellites to provide internet connectivity.
Berneke admitted, “We have two major business innovators entering the arena, recognizing its potential and working to industrialize this niche. Elon Musk deserves credit for shaking things up.”
While some Eutelsat shareholders view the OneWeb acquisition as risky, Berneke emphasized Musk’s influence in redefining the perception of business risk.
Berneke said, “Elon Musk is changing the way we think about risk across the business landscape. One of his great attributes is being willing to invest in high-risk ventures and move forward swiftly. We need to adopt a similar approach of taking calculated risks and learning from them.”
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