South Korea's Hanwha offloads Eutelsat stake as Starlink rival seeks new investors
By Gianluca Lo Nostro
South Korea's
Hanwha Systems
said on Thursday it was selling its entire 5.4% stake in
Eutelsat
for about 78 million euros ($85 million), as the Franco-British satellite operator seeks new investors.
Eutelsat has garnered unprecedented attention this year from governments looking for home-grown alternatives to SpaceX's
Starlink
for
satellite internet
connectivity.
The company is working on a new financing plan to fund the second generation of its low Earth orbit (LEO)
OneWeb
satellites and to fulfil commitments to the
European Union
's IRIS² project.
It has piled up hundreds of millions of euros in losses, particularly from its waning video business, while its 2023 acquisition of OneWeb has yet to yield the results it had hoped for due to competition and delayed deployment of technology.
Finance chief Christophe Caudrelier said in May that Eutelsat was looking for capital investors.
Hanwha's shares were offered at 3.00 euros ($3.42) apiece, representing a 13.9% discount to Eutelsat's closing price of 3.48 euros on Wednesday, a term sheet from bookrunner Citi showed.
It also marks a steep 74% loss on Hanwha's initial $300 million investment made in OneWeb in 2021, with the stake now valued at just $85 million.
The South Korean company said the sale, which is set to be concluded on Thursday, was not driven by an investment perspective but by a strategic shift to focus more on its core business operations.
"This decision reflects a long-term strategy to concentrate on defense-related satellites and
military communications
, rather than on civilian satellite operations and services," Hanwha said in a statement to Reuters.
A representative for Hanwha resigned from Eutelsat's board in April, signalling the company's diminishing involvement with the satellite operator.
MAJOR OVERHAUL
When asked by Reuters, Eutelsat said none of the other shareholders had expressed interest in selling their shares.
A company spokesperson declined to comment on media reports saying France may raise its stake in the group.
Eutelsat is also reshuffling its upper echelons. In a surprise move last month, it appointed Jean-Francois Fallacher as its new CEO and it is looking for a new chairperson after the current one announced his departure in February.
Eutelsat's Paris-listed shares fell as much as 16.8% in early trading on Thursday.
Hanwha became a shareholder in OneWeb before it merged with Eutelsat. It is also one of OneWeb's distributors in South Korea as part of an agreement signed in 2023 with the aim of securing LEO communications for the government and providing internet access to underserved areas.
Last week, South Korea's Science Ministry granted licenses to Starlink and Eutelsat OneWeb to operate in the country, with services expected to be launched soon.
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