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Bharti backed OneWeb merges with Intelsat; SoftBank to invest $1.7B

Satellite-based Internet Service Provider OneWeb has signed a definitive agreement to merge its business with Intelsat, a communications satellite service provider, both companies said in a statement yesterday. The size of the deal was not disclosed, however, both companies will look to merge in a share-for-share transaction. Note that Bharti Enterprises (Airtel's promoter group company) had earlier invested $500 million into One Web in 2015.  At that time, the company said that if an Airtel user walks near one of its terminals and if there is no cell tower around, the phone will connect to a OneWeb terminal and operate normally, charging the user through operator billing. Softbank to invest $1.7 Billion In addition, investment firm SoftBank which had earlier invested $1 billion in OneWeb, also entered into a definitive share purchase agreement wherein it has pledged to invest $1.7 billion in newly issued common and preferred shares of the merged entity. The merger deal and Softbank investment will be subject to all regulatory and shareholders’ approval. Apart from SoftBank, other investors in OneWeb include Airbus, Bharti, Coca-Cola, Hughes, Intelsat, MDA, and Virgin. While securing $1 billion from SoftBank last year, the company’s valuation reportedly shot up to $2.5 billion. Apart from this, the proceeds of the Softbank investment will be used to cut Intelsat’s debt by approximately $3.6 billion. Intelsat’s CEO Stephen Spengler said that “the transaction (merger deal), including SoftBank’s investment, will significantly strengthen Intelsat’s capital structure and accelerate our ability to unlock new applications, such as connected vehicles, as…

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