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A French state-backed satellite company has allied itself with Britain against Elon Musk’s SpaceX by taking a stake in the space internet company OneWeb.
Eutelsat is paying $550m (£395m) for a 24pc stake in OneWeb, which was rescued by the UK last year in a joint venture with Indian telecoms giant Bharti.
The French government has a 20pc stake in Eutelsat and the deal is expected to be a fillip for OneWeb as it seeks European support for its satellite internet business due to go live later this year.
OneWeb has been fighting a heated regulatory battle with SpaceX as the two companies compete to launch “mega constellations” of hundreds or thousands of satellites to provide high-speed internet access to rural communities and internet-enabled devices. Jeff Bezos’ Amazon is also planning to launch its own constellation known as Kuiper.
On Tuesday, SpaceX won approval from America’s communications watchdog to send a further 2,814 satellites into orbit at a significantly lower altitude than previously planned.
OneWeb and Amazon had objected to the plans, saying they could interfere with other satellite networks and increased the risk of dangerous space collisions.
Emmanuel Macron is believed to have previously expressed an interest in a Eutelsat-backed offer for OneWeb during last year’s bidding process, which ended with the UK government and Bharti each paying $500m to rescue OneWeb from bankruptcy last year.
After the deal, expected to be approved in the second half of this year, the three investors will each have a 24pc stake, with others including SoftBank, owning smaller amounts. The UK will retain a “golden share” that allows it to veto investments on national security grounds.
OneWeb uses a band of radio spectrum licensed by the French communications regulator, Arcep, to send internet signals to its satellites.
The move comes just days after Mr Musk accused OneWeb of “misleading” the public by claiming that their satellites nearly collided in orbit.
Mr Musk's SpaceX has already started providing broadband for customers in Britain using its Starlink network of satellites for £89 a month.
Starlink has a network of almost 1,400 satellites operating in low-Earth orbit at an altitude of 550km.
In comparison, OneWeb's 182 satellites operate at a higher altitude of about 1,200km and must pass through Starlink's constellation on launch.
The company aims to expand this to 648 satellites by the end of 2021, by which time it will have a service covering the UK, Northern Europe and Canada. It aims to launch a global service next year.
Eutelsat, whose core business of broadcasting satellite TV networks has come under pressure in recent years amid the rise of streaming, has pushed into internet services in recent years in an effort to boost growth. It launched an internet service in the UK to target half a million households in broadband blackspots last year.
Kwasi Kwarteng, the Business Secretary, said the investment marked a step forward for OneWeb's desire to offer global broadband connectivity.
“Eutelsat brings over 40 years of experience in the global satellite industry and this exciting new partnership puts OneWeb on a strong commercial footing, and the UK at the forefront of the latest developments in low Earth orbit technology," he said.
Britain and the EU fell out over space policy during Brexit negotiations, with the UK being cut off from the secure military signal from the European Galileo satellite navigation system.