NEWTOWN, Conn. - SoftBank Group Corp. has proposed merging satellite startup OneWeb with industry veteran Intelsat. Intelsat and SoftBank, owned by billionaire Masayoshi Son, are both investors in OneWeb.
The major sticking point to a deal actually occurring is Intelsat's large amount of debt. The Luxembourg-based satellite operator currently has about $15 billion of debt on its books, following the leveraged buyout in 2008 by private equity companies. Under terms proposed by SoftBank, the Japanese technology company would purchase some of Intelsat's debt. However, as news of the deal was revealed, bond prices increased to above what SoftBank originally proposed to pay for the bonds.
If a deal does go through it would be part of a broader trend within the satellite industry as companies diversify their technology. For years satellite companies could be divided into operators of satellites in geosynchronous Earth orbit (GEO) or low Earth orbit (LEO). Companies like Intelsat, SES, and Telesat operated were in GEO, while companies like Iridium operated in LEO.
However, with the latest rise of small satellite interest, that line has started to blur. SES recently acquired a 100 percent stake in medium Earth orbit (MEO) satellite operator, O3b. Telesat is investing in LEO satellites, and Intelsat has worked closely with and invested in OneWeb.
With these developments, it appears that companies are diversifying orbits in an attempt to increase slowing revenue growth and capture diverse markets.
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