Two European firms merge in $3.4 billion deal to rival SpaceX's Starlink internet

United Kingdom-based satellite operator OneWeb has had a good relationship with SpaceX in recent times. The company made an agreement with Elon Musk's firm to send a batch of its satellites into space after Russia opted out, citing western sanctions.

The two companies also recently informed the Federal Communications Commission (FCC) that they wanted to drop all past filed disputes against each other following a new spectrum collaboration between the two.

Now, OneWeb has agreed to merge with European rival Eutelsat in a bid for the combined firms to take on SpaceX's satellite internet dominance. Following the announcement, in a press release on Tuesday, Eutelsat will issue 230 million new shares and exchange them for all remaining OneWeb shares.

A new satellite internet merger

That means shareholders of OneWeb and Eutelsat will own 50 percent of the merged firm, with the new deal valuing OneWeb at $3.4 billion. The companies believe their merger will lead to a revenue of approximately 1.2 billion euros ($1.22 billion) in the 2022-23 fiscal year, according to CNBC.

In the press release, Eutelsat chairman Dominique D’Hinnin said the deal will allow the firms to "seize the significant growth opportunity in connectivity. This combination will accelerate the commercialization of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile."

OneWeb aims to deploy 648 low-Earth orbit satellites to provide high-speed internet in areas with low coverage. Currently, it has 428 satellites in orbit. These will now be combined with Eutelsat's 36 geostationary orbit internet satellites.

Unlike SpaceX, OneWeb's service is pitched at businesses rather than individual paying customers. Under the terms of the new merger agreement, OneWeb will continue to trade under its existing name, and it will continue to work from its headquarters in London, U.K. Eutelsat, meanwhile, is based in Paris.

SpaceX will soon have many more mega-constellation rivals

OneWeb CEO described the new move as "another bold step" for the company. "This combination accelerates our mission to deliver connectivity that will change lives at scale and create a fast-growing, well-funded company which will continue to create significant value for our shareholders," he added.

The deal requires OneWeb to jump a few regulatory hurdles, including a U.K. government national security clearance process it hopes to complete by next year. In the meantime, SpaceX currently has more than 2,200 satellites in orbit, and it means to eventually send roughly 30,000 total into space.

Amazon is likely the private company best positioned to rival SpaceX's Starlink services on a global scale. The company recently announced "the largest commercial procurement of launch vehicles in history." Eighty-three rocket launches by United Launch Alliance, Arianespace, and Blue Origin will send Amazon's 3,236 Project Kuiper satellites into LEO in the coming years. OneWeb and Eutelsat will have a lot of catching up to do, which is likely one of the main motivators behind its agreement.