France's Eutelsat to Buy Thales Satellite, Abandon ViaSat

(Bloomberg) -- France’s Eutelsat Communications SA ordered a new satellite to boost its broadband and in-flight connectivity services, abandoning plans to invest in ViaSat-3 with ViaSat Inc.

The Konnect VHTS satellite will be operational in 2021, and is to be built by Paris-based aerospace and defense manufacturer Thales SA, according to a statement late Thursday. Eutelsat also signed a multiyear pact with France’s biggest phone carrier, Orange SA, which will sell service to customers that terrestrial networks can’t reach. Thales will work with government buyers.

The cost, which wasn’t disclosed, will be covered by Paris-based Eutelsat’s 420 million euro ($514 million) annual capital spending plan, where the ViaSat project had been budgeted. Konnect VHTS, standing for Very High Throughput Satellite, will deliver 500-gigabit-per-second Ka-band capacity. Over the next decade, VHTS satellites will deliver “fiber-like services both in terms of price and speed,” Chief Executive Officer Rodolphe Belmer said in the statement.

“High-speed broadband will be a critical driver of Eutelsat’s growth from 2020 onwards,” he said. “Over the next decade, VHTS satellites will bring enough capacity to serve high-speed internet and in-flight connectivity markets at scale.”

‘Highly complex’

ViaSat said in an emailed statement that its capital plan was not dependent on Eutelsat’s participation and the news has “no direct impact on existing contracts.” It had hoped to reach an agreement on future funding, but the negotiating parties were “never able to get over some of the fundamental principles,” ViaSat said.

The Carlsbad, California-based company’s shares closed down 4.9 percent to $63.75 in New York on Thursday. The stock had been up as much as 1.6 percent before the news. Eutelsat shares fell 1.8 percent to 16.63 euros at 9:57 a.m. in Paris on Friday.

©2018 Bloomberg L.P.