Satellite players Eutelsat and OneWeb signed a provisional agreement to combine their businesses, with the pair planning to develop a common platform offering connectivity from low Earth orbit (LEO) and geostationary (GEO) birds.

In a joint statement issued a day after Eutelsat confirmed the two were in talks, the companies noted the resulting business would eventually have a fleet of 36 GEO satellites and 648 LEO: of the latter, 428 are already in orbit.

By combining the businesses the pair aim to address the “considerable market opportunity” brought by the growing need for reliable connectivity from B2C and B2B segments. In addition, they expect to achieve various savings from avoiding cost duplication and improving capacity fill rates.

The agreement values OneWeb at $3.4 billion with stakeholders receiving newly issued shares in Eutelsat.

On completion Eutelsat will own all of OneWeb, except for the share owned by the UK government.

Prior to the deal Eutelsat already owned a 23 per cent stake in OneWeb.

Assuming the deal completes, Eutelsat chairman Dominique D’Hinnin is set to be proposed as the chair of the combined entity, with OneWeb executive chairman Sunil Bharti Mittal as co-chair alongside Eutelsat CEO Eva Berneke.

Discussing the rationale for the deal Berneke noted: “This groundbreaking combination will create a powerful global player with the financial strength and technical expertise to accelerate both OneWeb’s commercial deployment, and Eutelsat’s pivot to connectivity.”

The deal is expected to close in the first half of 2023 subject to regulatory approval and clearance from Eutelsat shareholders at an EGM.