Eutelsat scales back OneWeb Gen 2 upgrade plan

Eutelsat has decided to hold off deploying significantly upgraded OneWeb broadband satellites to instead focus on adding continuity of service capacity for customers with long-term contracts, the French fleet operator said Feb. 16. The shift to a progressive approach for improving low Earth orbit satellite capacity and performance shaves off nearly one third of the company’s previous $4 billion budget for a second-generation constellation, Eutelsat CEO Eva Berneke said during an earnings call. Berneke said the strategy still leaves Eutelsat open to potential public sector funding from programs such as IRIS², Europe’s sovereign broadband project, for financing the development of new technologies that could be added to the constellation. “But it’s also really to make sure that the timeline works,” she continued, “I mean, it’s very important to us that we keep the continuity of service with our customers in these multi-year contracts and set them up over time, and then bring the new functionality when it’s ready.” After testing a OneWeb Gen 2 technology demonstrator last year, Eutelsat has been speaking to manufacturers about a constellation of around 300 satellites that could begin deployments as soon as 2025. Most of the 633 satellites in OneWeb’s current generation were launched between 2020 and 2023, and the constellation has a design life extending to around 2027-2028. The satellites were built by a Florida-based joint venture with Airbus of France, which recently bought Eutelsat out of the group for an undisclosed sum.

Eutelsat says integrating its geostationary broadband network with OneWeb’s low Earth orbit satellites is the best way to meet future global connectivity needs. Credit: OneWeb

Eutelsat did not detail how many satellites are under its revised strategy.

The operator has previously said a Gen 2 constellation could be smaller than Gen 1 partly because newer satellites would leverage Eutelsat’s geostationary satellites over high-demand areas.

During the Feb. 16 earnings call, Eutelsat chief financial officer Christophe Caudrelier said the company is talking to government-backed export credit agencies (ECAs) in India, the United Kingdom, and France to support the majority of Gen 2 costs.

The planned ramp-up of OneWeb’s commercial services worldwide would also support the investment.

Although all the satellites OneWeb needs for worldwide coverage are in position, ground segment delays are currently holding back global services.

Previously slated to begin global low Earth orbit services in early 2024, Eutelsat recently said it expects to have completed only 90% of OneWeb’s ground network by the end of June following a mix of installation and licensing setbacks.

Key enterprise and government customer markets for OneWeb that are waiting for services to come online include India and Saudi Arabia.

Eutelsat reported around 700 million euros ($754 million) in OneWeb customer backlog as of the end of December, up 23% from three months earlier and continuing to grow.

Customers in areas where OneWeb services are available, such as Alaska, are experiencing up to 195 megabits per second download and 32 Mbps upload speeds, according to Eutelsat, with a latency of 70 milliseconds.

GEO wins the day

Services from recently launched geostationary satellites Konnect VHTS and Eutelsat 10B helped put the operator on track for a return to growth following years of annual revenue declines thanks to its waning legacy video business.

Eutelsat recorded 572.6 million euros in revenue for the six months to Dec. 31, up 1% compared with the same period in 2022 when adjusted for currency changes on a like-for-like basis.

Video was the only Eutelsat business unit that did not post revenue growth, falling 8% year-on-year to 331.1 million euros — but still representing the bulk of the company’s total sales. Non-renewed and scaled-down broadcast contracts dragged the division down, along with sanctions against Russian and Iranian channels.

Government services, mobile connectivity, and fixed connectivity were up 10.5%, 35.6%, and 9.2%, respectively.

These three verticals included some contribution from OneWeb, Caudrelier said, underlining Eutelsat’s rationale for acquiring the company last year to boost its pivot to connectivity services.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, stood at 365.6 million euros Dec. 31, down 12.7% compared with 419 million euros a year earlier.