European satellite firms eye tie-up to create 'global champion'

French satellite operator Eutelsat said on Monday it was in talks with British counterpart OneWeb for a tie-up to create a "global champion" in broadband internet, rivalling US operators such as Elon Musk's Starlink.

Satellite broadband promises to bring coverage to the most remote areas of the planet and supply connectivity on aeroplanes and to products like connected cars.

Starlink heads the market with more than 2,000 tiny satellites in lower-earth orbit (LEO), just a few hundred kilometres above the Earth.

Eutelsat already provides some internet services through a deal with telecoms firm Orange, using its network of 35 larger satellites that operate thousands of kilometres from Earth in geostationary orbit (GEO) that are more commonly used for TV and other communications.

But Eutelsat said its tie-up with OneWeb, if it goes through, would be the first of its kind allying GEO and LEO satellites -- OneWeb has 428 in orbit.

The French firm said it would be "uniquely positioned" to exploit a market that it expected to be worth US$16 billion by 2030.

The "potential all-share combination" would "create a global leader in connectivity", Eutelsat said in a statement.

'Logical next step'

However, the European firms face stiff competition.

Musk is not the only tech billionaire with plans to dominate the market -- Amazon founder Jeff Bezos recently announced he intended to launch some 3,200 satellites.

Money is pouring into the sector, with Bezos apparently pledged US$10 billion to his so-called Project Kuiper.

Public institutions are also looking to get in on the act.

The European Union wants to deploy roughly 250 satellites by 2024 and China has a plan to launch 13,000 of its own.

The British government owns a stake in OneWeb.

Eutelsat already holds 23 percent of OneWeb's shares and the transaction would represent a "logical next step in the successful partnership", the French firm said.

The potential deal has several potential hurdles to clear though, including the need to be approved by Eutelsat shareholders and regulators.

"There can be no assurance that these discussions will result in any agreement," said the French firm.

Eutelsat's shares plunged by more than 17 percent in early trading on the Paris stock exchange.