OneWeb and Eutelsat have announced an agreement to combine forces in an all-stock deal.

SpaceX has established itself as the dominant provider of low-Earth orbit (LEO) satellite internet service. Unlike older generations of satellite internet, LEO services provide speeds and latency on par with traditional broadband. OneWeb is SpaceX’s UK rival, while Eutelsat is its EU counterpart.

OneWeb and Eutelsat have agreed to a $3.4 billion deal which will see Eutelsat and OneWeb shareholders each hold 50% of Eutelsat. The hope is that combining the companies will allow them to better leverage their individual advantages. Eutelsat, in particular, has strong cash flow while OneWeb has far more satellites in orbit — 648 versus 36.

“I am delighted to announce this new and significant step in the collaboration between Eutelsat and OneWeb,” said Dominique D’Hinnin, Eutelsat’s Chairman. “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.”

Once the deal is done, Eutelsat will effectively own 100% of OneWeb, minus the ‘Special Share’ owned by the UK government.