Eutelsat is Set for an Evolution With New CEO Eva Berneke

In late December, Eutelsat announced Eva Berneke as its new CEO, tapping a leader from outside of the industry at a pivotal time for the operator. Berneke, who has worked in the software and telecoms industries, joins Eutelsat as it shifts from a broadcast capacity provider toward a connectivity company. Over the last 15 months, Eutelsat made a significant investment in OneWeb and now the operator must look to navigate a successful future in a world where the competition for satellite capacity has never been greater.

In this interview, Via Satellite managing editor Rachel Jewett and editorial director Mark Holmes talk to Berneke about her initial observations of the satellite industry, her early ambitions for Eutelsat, and what she brings from the telecoms into the satellite industry.

VIA SATELLITE: What is the background of how you were offered the job at Eutelsat? Why did you decide to take it?

Berneke: It was a traditional headhunter calling about it. I read as it was official that Rodolphe [Belmer] was leaving. I hadn’t thought about it myself, as I am not a kid in the space family. I thought, I am sure they have someone who knows a lot more about space than I do. But the headhunter explained to me that they were looking for someone with a telecoms background, as they were looking to make a pivot — moving from selling raw capacity to broadcasters in the video and broadcasting ecosystem to being more about connectivity. They wanted to take part in the wider digital space. Everyone is talking about IoT, digitization, and some of these digital tools are moving into other industries, including possibly space.

I actually thought this was a good match with what I can do. They said I would have a solid team with good competencies on space. But what they were looking for is someone who could drive that transformation of the company from a video-based company to a more network-based connectivity company.

I thought this sounded interesting, especially the element about transforming a company. It is something I have been part of it several times. This is what gets me up in the morning. If somebody said to me ‘Don’t change a thing’ and ‘Keep running it exactly how it has been done,’ that is a bad idea for me.

VIA SATELLITE: Do you think we will see a big transformation take place at Eutelsat?

Berneke: It depends on how you define big. I think it will be more of an evolution than revolution. We still have a very strong video business. This will continue for a long time, it is super sticky. It is going to keep on being mature, and being in slow decline. But as in all big tech changes, there is a lot of value to be extracted by managing that well, because you can keep on innovating. The video part of Eutelsat still needs a lot of attention.

You need a different competency for connectivity and networks. It is much more about delivering certain services around it, going from megahertz to megabits to thinking about different user applications. That is what you see in the telecoms and B2B world. You need to think differently about big corporations, SMEs or various mobility uses versus fixed, triple play. That is something we need to build up.

This is all running on a network that needs maintaining and to evolve. We also have the arrival of the constellations. The super interesting part about the OneWeb acquisition is that this gives us a unique position of actually asking ‘What does multi-orbit actually mean?’ It sounds good, but which applications really need it? Where is it relevant? How will it work? How does the user equipment look? How does the whole ground infrastructure look? There is this evolution on the market side from video to connectivity, then there is a bit of big new tech arriving and rocking the boat on the networks side. There are a lot of balls in the air.

VIA SATELLITE: Coming from the telecoms sector, is it immediately obvious what the satellite sector can learn from the telecoms sector?

Berneke: There are several things. Let’s take the issue of customer-centricity. In the 1990s, it was all about building the best network. There was a lot of differentiation going on about the best network. Once you get the network to a certain level it all becomes about user applications, user terminals, customer centricity. In Europe, most networks are giving you pretty good coverage. It becomes all about who has the best user applications on top, especially on the B2B side.

I arrived in telecoms in 2007, and right away I was put on strategy and fiber rollout. I sat down with my engineers and asked them to help me understand the business case for fiber. I had some of my absolute best network engineers telling me, ‘Eva, we simply don’t see a household use of over 2 Mbps. No household is ever going to need more than 2 Mbps before 2050.’

This happened before the arrival of the iPhone, TiVo, Netflix. I had loads of discussions with the regulator, and I said the use for fiber is not going to be telemedicine. Most of that is going to work on a 2 Mbps connection. So, the regulator asked, ‘Is it all going to be entertainment and fun?’ I said ‘Yes.’ When you look at it today, it is Netflix and other entertainment sources that are driving the big jumps in the connectivity.

People expect to be connected. Even if they are on a boat in the middle of the Atlantic, or at a base camp in the middle of the Himalayas, then satellite has a totally different utility. You have big regions like Africa and the Middle East that will not have the same fiber rollout we have seen elsewhere. You have seen these big jumps in telecoms even the best technology engineers could not see coming, and we look back today and say ‘Of course that happened.’

That goes back to the LEO constellations and some of the discussions around IoT. IoT is probably one of those areas where the big slam dunk user case is still out there to be found. Maybe it is what Jeff Bezos is seeing in drone delivery, I don’t know. Maybe it is a totally different way of working the supply chain. Is it a totally different way of driving cars? Is it a totally different way of doing CSR [corporate social responsibility] as you can follow your energy footprint? I don’t know.

VIA SATELLITE: Do you think the telecoms industry is hungry for more satellite capacity?

Berneke: It is not just about the telecoms customers. I think there are many customer bases that are hungry for capacity. You have government, military, defense, research, telecoms, etc. The customer segments are multiple. But what is clear is the journey and the comparison here. In telecoms to begin with, it was all about the network. The sophistication has really increased. You are almost buying IT software products. It is bundled in with Microsoft offerings, hosting offerings. It is not just buying a mobile subscription. So, that is one of the questions here. What kinds of services can we offer here? What are the partnerships we need in services? These are the things we need to start thinking about. This is the journey we are on.

VIA SATELLITE: Telesat is building Lightspeed. SES has O3b mPOWER. Now, I know you have a stake in OneWeb. Is Eutelsat still behind others in terms of having multi-orbit assets?

Berneke: We are fully behind OneWeb and the longer term strategy is to keep increasing our stake if we can. We will work with them when it comes to technical and distribution agreements to do joint commercial approaches into the market. We have already been working on that for several months. You could say it is a cheap way to do it as we are only footing a quarter of the bill. We are not fully integrated like SES, for example. But, there is a willingness to go in all the way with some of the business savvy people such as Bharti and SoftBank. Is it a totally risk-free investment? I would say no. No LEO constellation is a risk-free investment, so that is also where we are trying to stay disciplined as a publicly listed company.

VIA SATELLITE: Can a traditional GEO operator survive going forward or does it need a multi-orbit play? Dan Goldberg, Telesat CEO previously said the operator had to do a LEO play. Mark Dankberg of Viasat probably has a different opinion here. How do you see the asset structure developing?

Berneke: You are probably right. Mark [Dankberg] doesn’t necessarily believe in LEO the way others do. I still think there is a lot of value in the GEO space. It is a confirmed business model. It works. It is an industry that has been around for 40 years. I think Mark makes a fair point that LEO is still in a place where some big bets have been taken. I think it is an interesting space to be in if you believe that broadband connectivity and latency would be super important for some of the applications. [If] there are only going to be three to four successful constellations out there, then you need to be in with one of the first ones. Being with No. 8 is not going to be fun.

That is where we see the optionality and putting in a stake with OneWeb as an interesting option. We do see good business cases for GEO, especially the cost of capacity for entertainment. A lot of entertainment does not need super low latency. For example, we are having a lot of discussions in the maritime business, and most of it is about downloading entertainment on cruise ships. GEO is a super effective way of doing that where we can focus that capacity on cruise ships. We still think there is a good and long future in GEO. It won’t be replaced by LEO overnight. We will continue to invest in GEO. But, we want to continue to follow the LEO space and the capacity provided and that potential jump in technology.

VIA SATELLITE: Could you talk more about the integrated service offerings between OneWeb and Eutelsat? Will you incorporate OneWeb capacity into Konnect broadband?

Berneke: What we are doing with that distribution agreement is starting to experiment with joint offers. For certain customer discussions, we can offer both GEO and LEO capacity. We are starting to experiment with how that can be put together. Right now, you don’t have terminals that can do both things. But, over time will you need that? A lot of the technology people are starting to look for ground equipment that can flow certain traffic via LEO and other applications. If you downloaded Netflix, you can use GEO capacity, but if you are doing something else, you can use LEO capacity. Those are the kind of things we need to start doing. The technology isn’t there right now.

What does a multi-orbit strategy actually mean? We are starting to take steps in that direction together with OneWeb, both on a technical and a commercial side, but also on a regulatory side, as spectrum needs to come together to make technology simpler. From all three levels, we are working closely with OneWeb to help them develop. It is good for them also to have our experience when you go about things like filings. It is clear that OneWeb commercial will focus on selling OneWeb. We will be the ones experimenting with combined offerings.

VIA SATELLITE: What do see as the top commercial prospects for that combined offering?

Berneke: That is a very big question. There are certain segments with a huge demand for capacity. Right now, maritime is one of them. I think also there could be elements of reducing the digital divide. Then there will be lots of wholesale telco agreements. OneWeb is essentially a B2B approach and not a B2C approach like Starlink. Getting through all the service providers and telcos will be a fairly long list, and I think most will be interested in both.

VIA SATELLITE: What is your view on taking minority investments in companies? One of your predecessors, Michel de Rosen, was not keen on this, as he always talked about control. As the leader of Eutelsat, will you look to buy things outright or take a minority stake?

Berneke: It depends on what you are looking at. Does the form of acquisition match the strategic rationale behind it, because there are a maximum amount of synergies and you need to acquire enough to get those synergies out. If you look at Viasat and Inmarsat, it is between $1.5 and $2 billion in synergies. You can’t get that out of an arms-length relationship.

If the strategic rationale is a new area, not looking to integrate, a very different company culture, very different technical teams, you don’t need to buy 100 percent. In my past, I have bought several companies but not integrated them 100 percent because of company culture and different market focuses. But, other companies, there was a much stronger integration case, whether it is customer base, technology integration. It very much depends on the strategic rationale behind it. If you are buying a company where you need the competences in, you need to get it into the company. You can’t leave them. You have to adapt to the situation. I haven’t laid out a full M&A plan for Eutelsat yet.

VIA SATELLITE: Do you think Eutelsat will have to be more aggressive than it has in the past? The company has a reputation of being relatively conservative. Do you think Eutelsat will have to change its culture a little bit?

Berneke: I think it is much more about customer-centricity and partnerships in the market. This is super important to be very close to them, especially when we talk about this telecoms pivot. That is necessary for us to implement the full strategy we have. We need to keep having our deep technical competence around space and satellite. We also need to add other competences to that. I think that is a cultural journey. You could argue there are areas where it is better to acquire the competences than build them yourself. We have always been global. Sometimes you can get there with a partnership. Sometimes, you will need a bolder M&A move. We want global scale and scope and a partnership is a great test for that before you start forking out a lot of money to buy it.

VIA SATELLITE: Would you say this is the biggest challenge you have taken on in your career?

Berneke: I have thought that every time I have taken on a new job. The first six months are always crazy. It was a big challenge as an engineer to start McKinsey. They didn’t have a lot of engineers when I started. It was a big challenge to start in telecoms after being at McKinsey. It was a big change to take on a private equity IT company. I think what I am looking for is new things to learn. I have taken on new technology companies before as a CEO, but not in space. I have led Scandinavian-based companies, but not a France-based company with government backing. I have led companies into the public sector, but less into the government sector. So that is new to me. But there are things I bring where I think that really fits.

VIA SATELLITE: Are your early observations of the sector different from your original perceptions?

Berneke: The amount of people who have spent their entire career in this industry is something that has surprised me. Very few people leave the family. In telecoms and IT you have more people going in and out. This is an industry that can feel very insular, seeing how people have grown up together here. It creates a super warm and fuzzy feeling. But it makes me feel that this is a family that I have not been a part of. It is like coming into a school where everyone has been in the same class since kindergarten.

I am amazed how this industry is never on time. I struggle to understand why there aren't huge penalties on delays. It is almost like a workshop. It seems to be accepted in the industry that things are delayed. I am not sure that it is the right thing to do. In telecoms, there are penalty schemes that get people into shape. This premium for on-time delivery hasn’t really come into the sector yet.

VIA SATELLITE: So, you might be a more demanding customer?

Berneke: I don’t know. Right now I have to live with the contracts. But the penalties on a late delivery to a cruise ship are huge. It is lost revenues. I am not saying we should have it. But it is very different. I would have expected that these big, manufacturing customized items would have that. It is more about ‘best effort,’ which I had not really heard of before.

VIA SATELLITE: What do you think of this access to space issue, and the difficulties in procuring launch capacity going forward?

Berneke: Access to space right now is an issue. I was talking to Claudie Haigneré, the first female French astronaut in space and she put the words to it very well. She said: ‘It is such a shock as Russia has always been a big part of the space industry and we have worked as one big family across it. Ripping this out is creating really big holes in the space industry.’ In other industries, there have been many more barriers between Russia, and even China and others. But in space, we have been working hand to hand. It is deeply integrated in space. We now realize where all the weak links are, and access to space has been very much hit by this, and you saw that with OneWeb. There are satellite delays, and some are launch delays linked to other issues. We had a supply chain issue before the crisis. I think potentially you may also see other countries like India and Japan stepping up here.

VIA SATELLITE: You are on the board of Lego. Is there anything in Lego’s customer or company culture that could be valuable to Eutelsat?

Berneke: I am on the board of Lego and a company called Vestas that does wind turbines. Both companies have a very strong CSR element. CSR has not necessarily been a huge topic in this industry. Also, I don’t think I have been in meetings with so many men in any industry I have worked in. They are super nice guys, but CSR is something that will come in. Lego started very early with climate actions, as well as diversity and balance. We will have topics that are very specific to space, like space debris and space clean-up. We also have a responsibility to the entire value chain, and we will work on that in the coming years. Sustainability is a part of any big company’s agenda, but I am not necessarily seeing that in most of the space industry. That is something I will look to bring in from Lego and Vestas. Lego has taken a strong point because they do produce plastic blocks, but they want to take a stand on sustainability and recyclability.

VIA SATELLITE: Are you really conscious of the fact that you have broken through a ceiling here in the space industry as one of the first female CEOs of a major space company?

Berneke: I was not conscious here. I was a mechanical engineer. I was at McKinsey in the 1990s. If I was to stop the only time I was the only woman in the room, I would not have gone very far. So, I am used to it. But, it has been an agenda point of mine.

VIA SATELLITE: Finally, I will end up with a football/soccer analogy question. Do you need to go into the transfer market and make a lot of changes — or do you have the team in place, and just have to coach them up to be successful?

Berneke: I have a very good team that has a lot of knowledge in the industry. My husband works in soccer, but it is interesting as many people still don’t have a choice of where to go. In most companies, most people have a choice. If they want to stay, they will. It is a two-way street. I hope most will say this is a super exciting journey that I am on with this telecoms pivot. However, not everyone might want to change. People may not like it. It is a super hot market for tech talent. So, some of your top tech people will get stolen away, and you will have to go get some new ones. That is something I am super used to in technology. Once you get a great person to evolve, they get picked up by either another company in your segment or another sector. Great talent will always be in demand. VS