Anglo-French concordance on Big Tech space threat

Sixty years after Britain and France signed a treaty to build the supersonic airliner Concorde together, the two nations are set to co-operate in aerospace again.

Both will have a seat on the board of a new satellite operator aiming to take on billionaire space entrepreneurs Elon Musk and Jeff Bezos to ensure Big Tech does not build a monopoly in space.

As we first reported at the weekend, the UK government is set to become a minority shareholder in a listed French business, as Eutelsat nears a deal to merge with OneWeb, the space-based internet company rescued from bankruptcy by Boris Johnson’s government.

There are others involved. The French state owns a 20 per cent stake and China’s sovereign wealth fund owns 5 per cent in Eutelsat. The UK has just under 18 per cent of OneWeb and Indian billionaire Sunil Bharti Mittal has 30 per cent. After the deal, shareholders from both sides will be diluted. Paris-listed Eutelsat has a market value of €2.4bn and has roughly €3bn of net debt. In its most recent funding round, OneWeb was valued at $3.4bn.

The combination of investors and companies will take on Elon Musk’s Starlink and Jeff Bezos’ Project Kuiper with a rival lower earth orbit (LEO) constellation of satellites providing internet access.

OneWeb, which has 428 satellites in orbit, was a pioneer in the field but its current technology is acknowledged to be out of date. Musk’s Starlink has more than 2,000 satellites in orbit with newer technology.

As Lex points out, Eutelsat lacks growth in its existing satellite broadcasting business but has the cash flow to pay for some with OneWeb, which itself is in dire need of investment to upgrade its offering

However, income-oriented investors in Eutelsat are initially displeased at the prospect that this value stock with plenty of free cash flow and high dividends is going to become something completely different. Its shares are down 18 per cent on the news.

The Internet of (Five) Things

1. Fibre on a diet
A worldwide shortage of fibre optic cable has driven up prices and lengthened lead times. Europe, India and China are among the regions most affected by the crunch, with prices for fibre rising by up to 70 per cent from record lows in March 2021. Meanwhile, Europe’s largest broadband provider Vodafone has reported revenues edged higher in its last quarter, to €11.3bn, from €11.1bn a year earlier.

2. Voyager spurns FTX rescue offer
Voyager Digital has rebuffed an approach by billionaire Sam Bankman-Fried’s companies to buy the crypto lender’s assets out of bankruptcy, describing the offer as a “lowball bid dressed up as a white knight rescue”. Lex says Bankman-Fried appears to be a Wall Street vulture investor at heart.

3. New Oriental’s successful reinvention
President Xi Jinping’s education reforms last year wiped 90 per cent off the value of China’s biggest private sector education company, New York-listed New Oriental Education. But its shares have risen 125 per cent in the past three months as New Oriental’s founder Yu Minhong has turned to livestreaming. English training and history lessons are being combined with unabashed product sales, in a successful pivot from physical classrooms to online services.

4. Singapore seeks tech listings boost
Singapore is lobbying its largest tech companies to relist in the city-state, arguing it is their “national duty” in an escalation of the financial hub’s bid to boost the appeal of its stock market. Over the past year, exchange officials have intensified attempts to persuade Singapore-based companies, including tech conglomerate Sea and superapp Grab, to return after completing IPOs in the US.

5. Inside Ukraine’s open-source war
Behind the front lines, engineers are setting up vitally important digital networks to aid in the defence of Ukraine, camouflaging satellite terminals from Russian interference and solving other technological warfare problems such as how to detect Russian drones. Gillian Tett writes for FT Weekend on “the world’s first open-source war”.

Tech week ahead

Tuesday: Google and YouTube parent Alphabet reports second-quarter results. The tech giant is expected to record a slowdown in revenue growth as its ad business takes a hit amid broader macroeconomic uncertainties. Software giant Microsoft will report fourth-quarter earnings after warning it will take a hit from a stronger dollar. India holds its first-ever auction of 5G spectrum. The government plans to auction 72 gigahertz of spectrum, worth 4.3tn rupees ($50.1bn), valid for 20 years. The auction is expected to draw aggressive bidding by India’s top telecom company, Reliance Industries’ Jio, as it looks to expand its lead over rivals Airtel and Vodafone.

Wednesday: Facebook parent Meta reports second-quarter earnings. It is expected to record its first drop in revenue in over three years, hurt by the slowing market for digital ads globally. Richard Waters looks at how Twitter and Snap’s results have darkened the mood among investors. Qualcomm and Spotify also report.

Thursday: IPhone maker Apple will announce its third-quarter earnings after the bell, with investors looking to see if it has been able to overcome supply problems and production delays. Amazon, Intel and Samsung Electronics also report.

Friday: Earnings in Asia from Sony in Japan and LG Electronics in South Korea.

Weekend: Airbnb pulls out of China, ending a six-year venture, with the second half of the year complicated by the country’s strict mobility restrictions due to Covid-19. The US home-sharing provider is among a number of foreign internet companies, including LinkedIn and Yahoo, that have ceased operations in China as the country tightens regulations.

Tech tools — DJI Mini 3 Pro

Fancy a drone that’s lighter than a block of butter? The latest flying camera from DJI packs beastlike features into a 249g package, writes Jamie Waters.

That number matters: in the UK and other places, drones under 250g can be flown near people provided they are registered. (A caveat: its standard battery will last 34 minutes; if you want longer stamina, a bigger battery will take it over 250g.) The palm-sized device’s collision sensors and image-taking abilities are a step up from previous models: its camera can shoot 4K video or 48MP photos. Its wings fold neatly like a damselfly, for stashing in a coat pocket. Opt for the package that includes DJI’s new LCD-screen remote control. The £709 DJI Mini 3 Pro is one of a gaggle of gadgets in HTSI’s Top Tech for Travellers round-up.