French company Eutelsat is preparing a deal with the British satellite operator OneWeb

French satellite company Eutelsat is set to buy British partner OneWeb in a deal that could be announced as early as Monday.

According to sources, OneWeb was valued at $3.4 billion. Eutelsat already has a 23% stake in OneWeb and is its second shareholder.

The merger will solidify their position in the competition to build a constellation of low-orbit satellites, challenging Elon Musk’s Starlink, Amazon.com Inc.’s SpaceX, and Project Kuiper.

Demand for satellite launches is expected to rise after sanctions pushed the Russian space launch industry into the background, and huge constellations of satellites could become a new channel for transmitting broadband Internet from space.

The merger also depends on the political situation as the merger will take place between Indian billionaire Sunil Bharti Mittal, France, China, and the UK as shareholders of the combined company. Bharti Global is the largest shareholder of OneWeb.

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The largest shareholder of Eutelsat is the French state investment bank Bpifrance with 20%. The fourth largest shareholder is the Chinese sovereign wealth fund China Investment Corporation.

OneWeb, in turn, was saved from bankruptcy by the British government and the Indian Bharti Global. But after the merger, the British government will have a minority stake in the combined business.

Eutelsat’s market value on the Paris Stock Exchange is 2.4 billion euros ($2.45 billion) and its net debt at the end of 2021 is 3 billion euros.

Based on information from another source, the UK will retain special rights on OneWeb, including veto power over sales to customers deemed unsafe and veto power over the relocation of headquarters.

These rights could jeopardize the so-called Five Eyes intelligence alliance, which includes Australia, Canada, New Zealand, the United Kingdom, and the United States.