Musk is 'changing the way we think about risk': Satellite incumbent plans fightback against Starlink

PARIS — Eutelsat is 1 of the biggest outer companies successful the world, but has faced declining gross successful its accepted businesses astatine a clip erstwhile it is handling a immense acquisition and facing disruption from billionaires Elon Musk and Jeff Bezos.

Eutelsat CEO Eva Berneke is betting connected that massive acquisition of a British steadfast called OneWeb to crook astir the company's fortunes.

"OneWeb is the large bet," Berneke told CNBC successful an interrogation this week astatine the VivaTech league successful Paris.

Eutelsat makes astir of its wealth from satellites that supply connectivity to broadcast operations similar TV networks. But that gross is dilatory declining. These alleged geostationary oregon GEO satellites is what Eutelsat specializes in.

OneWeb, a British company, specializes successful alleged debased Earth orbit, oregon LEO satellites, which are utilized for things similar net connectivity.

By combining Eutelsat's bequest GEO concern with the LEO concern of OneWeb, Berneke feels similar it could beryllium a large advantage.

"[What ]OneWeb brings is simply a debased orbit constellation, a spot similar Starlink, wherever we tin past commencement combining the 2 networks with a GEO positive LEO network," Berneke said.

OneWeb, a nonstop rival to Elon Musk's Starlink, which counted Japanese elephantine SoftBank among its investors, filed for bankruptcy successful 2020. The U.K. authorities astatine the clip invested successful the institution to prevention it. Eutelsat announced past twelvemonth it would get OneWeb.

Starlink aims to make a constellation of satellites that supply net connectivity connected Earth.

Over the past year, Eutelsat shares person fallen astir 50% connected the large changes taking spot astatine the company. Eutelsat suspended its dividend past twelvemonth to absorption connected concern successful OneWeb and its caller satellites known arsenic "Gen 2."

Berneke admits this has upset shareholders but determination are caller investors coming into the stock.

"We've seen immoderate pushback from shareholders. And that has to bash with a spot of a large change. Eutelsat utilized to beryllium a institution paying precise precocious dividends with a precise unchangeable currency flow, but not a batch of growth. And what we're telling them present is that with this merger, we're going to beryllium a precocious maturation company," Berneke said.

"We're going to halt paying immoderate dividend. And they should spot that returns coming backmost erstwhile we've paid 4 cardinal [euros] for Gen 2 [satellites]. So that's a spot of 180 degree, which means that a batch of, particularly the shareholders who are determination who liked the yearly dividend, are saying, 'well, possibly we'll instrumentality our status wealth determination other and spell there'."

Berneke revealed to CNBC that the institution plans to dual database connected the London Stock Exchange arsenic soon arsenic the OneWeb woody is closed.

Part of Eutelsat's anticipation with OneWeb is that it volition assistance the institution vie with Musk's Starlink arsenic good arsenic Jeff Bezos and Amazon's effort with Project Kuiper. The second is besides attempting to motorboat satellites for net connectivity.

"We conscionable person the 2 biggest concern innovators coming successful and saying, 'oh, this is an absorbing space, I tin bash thing here. I tin really industrialize this niche.' And I deliberation that's what Elon Musk needs to person a batch of recognition for doing, truly shaking up this," Berneke admitted.

Many Eutelsat shareholders spot the OneWeb acquisition arsenic a risk. But Berneke said that Musk has changed the mode businesses deliberation astir risk.

"Elon Musk is changing the mode we deliberation astir hazard broadly successful business, I deliberation 1 of the large things he's acceptable to bash is putting his wealth down taking risks and moving accelerated forward," Berneke said.

"One of the things we request to commencement doing is taking a measured risk, but besides beryllium capable to determination guardant superfast and larn from those risks."