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Germany blocks full Chinese takeover of satellite startup

Shanghai Spacecom Satellite Technology, holding around 53% of the German tech company KLEO Connect, had expressed interest in acquiring an additional 45% stake from the German firm EightyLeo. However, this move faced opposition from Berlin, with the German government citing national security concerns as the reason, as reported by sources close to the matter to AFP on Thursday.

Germany's decision to block a complete Chinese takeover of this satellite startup reflects its increasingly stringent stance towards Beijing. Chancellor Olaf Scholz's administration has been actively pursuing a strategy to reduce reliance on China and mitigate potential risks.

KLEO Connect, a German technology company, is ambitiously working on establishing its own network of satellites in low Earth orbit to provide internet connectivity to remote areas. They aspire to compete with Starlink, a project operated by Elon Musk's SpaceX, which has gained substantial importance in the context of the Ukraine conflict, serving as a critical communication tool for Kyiv.

Reports from German media suggest that Shanghai Spacecom Satellite Technology (SSST) initially owned approximately 53% of KLEO Connect and sought to acquire an additional 45% stake from EightyLeo, a German company. However, the German government intervened, blocking SSST's acquisition plans after an evaluation by the Ministry of Economy concluded that it could pose a threat to public security.

KLEO Connect has not issued any comments regarding this matter, and the Ministry of Economy has also refrained from making any official statements.

This episode reveals a protracted struggle for control over the company, centered on frequency rights, which grant access to satellite spectrum. These rights were registered in Liechtenstein several years ago, as reported by Die Welt newspaper.

Recent incidents have underlined Germany's mounting apprehensions about Chinese investments. Last year, the government prohibited the sale of two chipmakers to Chinese investors due to security concerns. Additionally, the proposed sale of a stake in Hamburg port to a Chinese company ignited a heated political dispute, ultimately resulting in Chancellor Olaf Scholz approving the acquisition, albeit with a reduced stake size.

Photo Credit: Reuters