Government buys into bankrupt OneWeb for $500m
The UK government made a successful joint bid with Indian space organisation Bharti Global to acquire bankrupt satellite network OneWeb for $500m apiece.
Amidst record spending to stem the economic fallout of the coronavirus pandemic, the UK government stepped in alongside Gharti Global to form a consortium that acquired UK satellite outfit OneWeb.
Having filed for bankruptcy protection in March, OneWeb said the $1bn injection it would allow it to “resume operations as soon as possible and continue with progress towards providing global high-speed, low latency connectivity via its state-of-the-art satellite constellation”.
We are excited to announce that a consortium of @beisgovuk & Bharti Global have committed to provide more than USD$1 billion to acquire OneWeb and fund the full restart of our business operations. (1/7)
— OneWeb (@OneWeb) July 3, 2020
The acquisition is part of Project Birch – a plan to bail out stricken UK companies – and shows the pandemic hasn’t curbed government plans to join the US, China and Russia as global space technology leaders.
“This deal underlines the scale of Britain’s ambitions on the global stage,” said business secretary Alok Sharma.
The rescue package will allow OneWeb to boost its satellite fleet from the current level of 74 towards the 650 planned for global coverage.
OneWeb filed for bankruptcy protection and made staff redundant after failing to raise additional funding for more satellite launches when majority investor SoftBank revoked outstanding investment commitments.
According to the BBC, BEIS plans to reverse the UK OneWeb redundancies and revive previous operations to “build a spacecraft network to deliver broadband”, despite the current lack of UK launch capabilities.
Untested repurposing of OneWeb satellites
As the third-largest mobile operator in the world with 425m customers, Bharti will bring OneWeb a new revenue base and support the satellite operator with commercial and operational leadership. OneWeb’s fleet of satellites will supply a broadband internet constellation, providing high-speed broadband to UK households, alongside other services.
The UK will also use OneWeb for Positioning, Navigation and Timing (PNT, also know as sat-nav) services. Access to sat-nav facilities has become a priority as a result of the Brexit, which will deny the UK access to secure EU Galileo satellite navigation system. Repurposing satellite web technology for this application is relatively untested, making the government’s space investment something of a gamble.
OneWeb and its employees have benefited from this government largesse, but the deal gas widely questioned by the UK’s space, tech and government sectors.
“OneWeb was not profitable before the investment and given the UK government’s track record on technology, our involvement is unlikely to be a magic wand to suddenly make it profitable,” commented govtech influencer Bill Mew.
“OneWeb operates a completely different type of satellite network from what is typically used to run navigation systems. It is a collection of satellites in low Earth orbit, which are used to provide internet access for people on the ground. The question is, are we going to be clever enough to completely redesign and repurpose these satellites to bolt on a navigation payload using unproven technology?”
“We are making sure we are protecting the taxpayer at the same time as we make funds available,” responded Sharma in a recent BEIS committee meeting.
NEWS: The government has secured a stake in cutting-edge satellite firm @OneWeb, putting the UK at the forefront of the latest advances in space tech, improving access to broadband and developing our advanced manufacturing base https://t.co/C5snpp89QQ#UnleashingInnovation
— Dept for BEIS (@beisgovuk) July 3, 2020
OneWeb sent its last batch of 31 satellites into orbit on a Russian Soyuz rocket in March. The relay stations are currently constructed in Florida in partnership with Airbus. If the acquisition passes regulation scrutiny, construction could be moved in part to the UK
“Our access to a global fleet of satellites has the potential to connect millions of people worldwide to broadband, many for the first time, and the deal presents the opportunity to further develop our strong advanced manufacturing base right here in the UK,” said Sharma.
“There are already collaborative options where costs would be shared. The government has yet to make a compelling case for going it alone, ” said Mew. “Maybe when they find that it has failed for the intended navigation system, they’ll refocus it on rural broadband access and claim that this was their intention all along – you never know.”