Yahoo Finance UK to become shareholder in French company accused of broadcasting Russian propaganda
The British taxpayer will become a shareholder in a French satellite business accused of broadcasting Russian propaganda as part of the multi-billion pound merger of OneWeb and Eutelsat.
OneWeb, which was bailed out by Boris Johnson in 2020, is being taken over by Eutelsat, a Paris-listed satellite company that operates communications and TV satellites.
The French company, which has a network of 36 satellites, has been accused of failing to stop broadcasts of Russian TV channels which have faced claims of being “spearheads of the Russian war propaganda machine” to 15 million homes. The French state has a 20pc stake in Eutelsat.
But Eva Bernke, Eutelsat chief executive, said on Tuesday the broadcasts were “linked to the Eutelsat policy of neutrality” and that it would “continue to broadcast together with our three Russian customers”.
Eutelsat has faced pressure from activists to cut off its Russian business. Reporters Without Borders said the channels carried by Eutelsat “constantly broadcast disinformation that, in effect, condones war crimes, incites violence and hatred, and legitimises the Russian army’s war of aggression in Ukraine”.
The decision to carry on broadcasting comes despite Russia banning OneWeb from launching its rockets from a cosmodrome controlled by the Kremlin in Kazakhstan in March.
Neil Masterson, OneWeb’s chief executive, was placed on the Kremlin’s list of sanctioned persons and is banned from visiting Russia.
Ms Bernke defended Eutelsat’s Russian business, saying its channels were mostly “entertainment, sports and children’s channels” and that it had already blocked TV channels that had been subject to formal sanctions by the European Union.
Her comments came as Eutelsat and OneWeb confirmed that a merger between the French and British businesses would go ahead.
The deal will see OneWeb shareholders, who include the taxpayer, issued 230 million Eutelsat shares. Shares in Eutelsat plunged 17pc on Monday on news of the deal. OneWeb is expected to require up to $3bn in further investment, spooking shareholders in the French company.
OneWeb, founded in 2012, is developing a network of 650 “low-earth orbit” satellites that will provide rural internet connectivity to remote areas. It is also expected to have defence and security applications, such as providing a back-up to the GPS navigation system.
The deal values OneWeb at around $3.4bn (£2.8bn), the companies said. The British Government’s stake is currently worth around $600m.
The all-share deal will see OneWeb shareholders issued 230 million Eutelsat shares, a 50:50 split with current investors in the French business. It will be listed in Paris, but will also seek to float on the London Stock Exchange.
In financial forecasts published by Eutelsat, the company said it expected to see “no material deterioration of revenues generated from Russian customers” despite the merger.
Eutelsat’s Russian business contributed 6.3pc of its turnover, or €76m (£64m), in 2021.
The British taxpayer will hold around a 9pc stake in the merged business. The Government said on Tuesday that Britain “will now have a significant stake in what will become a single, powerful, global space company, working on the sound financial footing needed to make the most of the technological advantages it has to compete in the highly-competitive global satellite industry, against companies around the world”.
The Government said it would keep a golden share in the combined business that gives the UK first preferences over manufacturing, rocket launches and a veto over future OneWeb customers. Both the British and French governments are expected to have seats on the company’s board.
Combining OneWeb and Eutelsat is seen as a way to build a European challenger to Elon Musk’s Starlink satellite constellation, a network of more than 4,000 satellites, as well as a rival to Chinese space ambitions.
The combined company is expected to have revenues of €1.2bn. The pair will also make capital savings of around circa €80m per year after completion.
Eutelsat shares dropped a further 8pc in early trading on Tuesday.
