TAMPA, Fla. — Regulatory delays in India have knocked Eutelsat off course for reaching 90% of the world with its OneWeb low Earth orbit (LEO) broadband constellation by summer, the French satellite operator said May 14.
The company said last year it was the first to get permission to provide commercial satellite broadband services from IN-SPACe, India’s newly created space regulator, but radio waves from the country’s government still needed to be allocated.
Eutelsat is “on track in terms of landing rights and operating permits with the exception of India” for reaching its mid-2024 coverage goal, chief financial officer Christophe Caudrelier told investors during the operator’s May 14 earnings call.
With 633 satellites in LEO, the operator had planned to start worldwide services in early 2024, before falling behind on regulatory approvals and rolling out gateways for the network.
Caudrelier said Eutelsat has deployed 34 gateways to date and is on track to reach 38 by mid-2024, enough to cover 90% of the globe.
Around 40 gateways are needed to provide services globally, excluding Afghanistan, Belarus, China, Hong Kong, Cuba, Ecuador, Iran, North Korea and Russia.
Eutelsat has previously highlighted significant “take-or-pay” contracts in India for LEO broadband capacity, part of a 3.9 billion euro ($4.2 billion) backlog of future revenues.
While Eutelsat has not broken out OneWeb financials since acquiring the U.K.-based company last year, Caudrelier said connectivity accounts for more than half of this backlog.
Most of Eutelsat’s revenue growth in the years ahead will come from OneWeb rather than the company’s legacy geostationary satellite fleet, Caudrelier added.
He said Eutelsat remains on track to pick manufacturers to develop a second-generation constellation for OneWeb in early summer. The company does not plan to deploy another geostationary satellite until 2026.
Connectivity pivot
Eutelsat has historically been a provider of satellite TV services, a declining market representing about 53% of the 301 million euros the company recorded for the three months to the end of March.
Fixed and mobile connectivity services represented 19% and 13% of revenues, respectively, with 15% coming from government services.
Video revenues were down 4.9% compared with the three months to March 31, 2023, when adjusted for currency changes on a like-for-like basis.
However, government, mobile and fixed connectivity were up 22.1%, 48% and 24.2%, respectively.
These increases helped total revenues climb 8.3% year-on-year, putting the operator on track to return to annual growth following years of revenue declines amid its waning legacy video business.
Another big market for Eutelsat’s government and enterprise LEO services is Saudi Arabia, where OneWeb has partnered with NEOM Tech & Digital Company, which is developing a city and tourist destination in the northwest of the country.
Joanna Darlington, Eutelsat’s chief communications officer, said on the earnings call that the company is unconcerned about reports that NEOM is scaling back these plans.
“It doesn’t affect our agreements,” she said, adding that Eutelsat typically signs take-or-pay contracts for OneWeb capacity.
Changing competition
Eutelsat also dismissed mounting competition from SpaceX’s Starlink LEO constellation and plans by European rival SES to buy Intelsat.
“SES will spend probably around $3 billion of cash in this transaction and clearly our analysis is that it reduces SES optionality to invest in other projects,” Caudrelier said, and “in the meantime Eutelsat continues our integration with OneWeb.”
Eutelsat has a deal worth as much as $500 million to sell LEO capacity to Intelsat, which he said is unaffected by the proposed acquisition because neither operator has their own LEO network.
And although Starlink is increasingly branching out of consumer broadband into the markets OneWeb is targeting, Darlington said “we can live quite happily with … maybe a 15-20% market share of the total LEO market.”
Eutelsat also provided few extra details about talks the company is having with external infrastructure investors in its ground network.
Caudrelier said these investors approached the company about creating a network infrastructure investment specialist similar to those in the terrestrial telecoms market.
Eutelsat is a well-positioned “starting point for a venture like this,” he said, and “the combination of GEO and LEO is obviously a plus.”
Bloomberg, which first reported the talks May 3, said Eutelsat’s ground network is worth more than 800 million euros.