ROME/PARIS/LONDON, Oct 23 (Reuters) – A deal to forge Europe’s answer to Elon Musk’s Starlink was reached on Thursday as the continent’s top space firms agreed to combine their satellite manufacturing and services businesses.
Marking the most ambitious tie-up of European aerospace assets since the creation of missiles maker MBDA in 2001, Airbus and Thales of France and Italy’s Leonardo will create a Toulouse-based venture to begin operations in 2027.
French Finance Minister Roland Lescure said the preliminary deal would “strengthen European sovereignty in a context of intense global competition”.
Italy’s Industry Minister Adolfo Urso said it supported the growth of European champions to compete globally.
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Code-named “Project Bromo”, talks between the three groups started last year.
Europe’s top satellite makers have long competed to build complex spacecraft in geostationary orbit but have been hit by the arrival of cheap, tiny satellites in low Earth orbit, notably the Starlink network built by Musk’s SpaceX.
Thales CFO Pascal Bouchiat, announcing quarterly sales that included an initial contract for IRIS, Europe’s planned secure satellite network, hailed the new venture but warned on the competition ahead.
“This first development contract for IRIS doesn’t take away the challenges that the European industry, in particular, is facing,” he told reporters.
The new combination will employ 25,000 people with revenue of 6.5 billion euros ($7.58 billion), based on 2024 figures.
It is expected to generate “mid-triple digit” millions of euros of synergies starting after five years, the companies said.
Shares in Leonardo rose almost 2% while Airbus and Thales were up less than 1% in afternoon trading.
“The initiative is certainly positive, as it creates a European leader capable of competing globally and improves the profitability of a business … that has struggled in recent years,” analysts at Italian investment bank Equita said in a note.
