What's going on?

Japanese telecom giant SoftBank is quarterbacking a deal to combine a US satellite startup (which it partly owns) and a struggling European satellite operator with the ultimate aim of spreading internet connectivity around the world! (tweet this)

What does this mean?

OneWeb, the US startup, said on Tuesday that it had agreed to buy Intelsat, an established Luxembourg-based satellite company. One potential snag is that investors that have lent Intelsat money (i.e. its bondholders) must approve the deal because it involves those investors converting some of their bonds into shares in the new company.


If the deal gets approved, it will marry a traditional satellite operator � which typically sends satellites far into space at a high cost � with a startup that is focusing on cheaper, lower altitude satellites. The lower cost satellites and complementary technology should help the combined company deliver broadband services to less developed parts of the world at a relatively low cost (among other things).

Why should I care?

The bigger picture: Less expensive internet could transform emerging markets.

There are many parts of the world which the internet either doesn�t reach or where it�s prohibitively expensive and/or slow. Better technology and explicit efforts (such as by Mark Zuckerberg) are helping to expand that connectivity � and offer developing economies the same transformative benefits that more developed countries are already enjoying on a wide scale.


For markets: SoftBank is on a spending spree.

SoftBank, which already owns 40% of OneWeb, is injecting more than $1 billion dollars into the new company, which is crucial to getting this deal done. Last year it spent $32 billion buying UK chipmaker Arm Holdings in a big play on the Internet of Things. A few weeks ago, it bought the US investment management firm Fortress for over $3 billion. And it�s recently spearheaded, with Saudi Arabia, a separate $100 billion fund that will focus on tech investments. Investors will be asking who�s next on Softbank�s list of targets.