Luxembourg-based operator Intelsat has signed a definitive combination agreement to merge in a share-for-share deal with satellite start-up OneWeb, which is backed by Japan’s SoftBank Group.

SoftBank has also entered into a definitive share purchase agreement with Intelsat to invest $1.7bn in newly issued common and preferred shares of the merged entity.

SoftBank will purchase voting and non-voting shares in the combined company for $1.7bn in cash as part of the deal, and will also acquire a 39.9% voting stake.

The merged company will be headquartered in Luxembourg once approved, while its subsidiaries are expected to maintain presence in the US, including at OneWeb’s new manufacturing facility in Exploration Park, Florida.

OneWeb is currently designing and planning to build a communications network, with a constellation of several low-earth orbit (LEO) satellites that will provide worldwide internet access.

"As an early equity investor in OneWeb, Intelsat recognised a network that was a complement to our next-generation fleet and a fit with our long-term strategy."

Intelsat CEO Stephen Spengler said: “We believe that combining Intelsat with OneWeb will create an industry leader unique in its ability to provide affordable broadband anywhere in the world. As an early equity investor in OneWeb, we recognised a network that was a complement to our next-generation Intelsat Epic fleet and a fit with our long-term strategy.

“By merging OneWeb’s LEO satellite constellation and innovative technology with our global scale, terrestrial infrastructure and GEO satellite network, we will create advanced solutions that address the need for ubiquitous broadband.

“The transaction, including SoftBank’s investment, will significantly strengthen Intelsat’s capital structure and accelerate our ability to unlock new applications, such as connected vehicles, as well as advanced services for our existing customers in the enterprise, wireless infrastructure, mobility, media and government sectors, while also reducing execution and other risks.”

The company also noted that both the merger and the SoftBank investment are subject to a number of conditional and regulatory approvals, as well as certain existing Intelsat bondholders' approval.

Image: A spacecraft in space. Photo: courtesy of Thegreenj.