A UK business minister overruled advice to invest in a satellite operator facing bankruptcy.
In a highly unusual move, the civil servant in charge at the business department at the time wrote asking for clarification about the $1bn deal to rescue OneWeb.
Sam Beckett, Acting Permanent Secretary and Accounting Officer at the Department for Business, Energy and Industrial Strategy (BEIS) raised the same issues that were highlighted by eeNews Europe, that significant additional investment in the low earth orbit (LEO) satellite constellation would be required. A new permanent secretary has this week taken over following a recruitment process.
“The fact that any investment would also be alongside other private commercial investors as part of a wider consortium, with one large and trusted investor already on board, indicates that there is a rational commercial case for investing,” she said. “However, it should be noted that the lead co-investor is a telecoms company who will also be considering synergies with the wider businesses, in addition to the pure commercials of the case, which are not relevant to a government decision on this investment. Moreover, there remain a very broad range of uncertainties and possible outcomes around this case, so it is hard at this time to be confident in the underlying assumptions or the likely returns.”
The secretary of state, Alok Sharma, said the deal had been agreed with the UK finance minister, Rishi Sunak.
“OneWeb, a UK-based company, represents an opportunity for UK interests globally,” he said. “There are also broader potential benefits that could be realised beyond global broadband. lf OneWeb is successful, the UK would have a share in a global space platform, including through possible future research and development, and potentially bringing future manufacturing to the UK,” he added.
Next: Other benefits from satellite deal
“There could be wider, less quantifiable benefits of signalling UK ambition and influence on the global stage. The fact that any investment would also be alongside other private commercial investors as part of a wider consortium, and as you say, one large and trusted investor already on board, indicates a rational commercial case for investing,” said Sharma.
Beckett asked to be instructed to continue with the deal. “The purchase – both in its scale and the fact that the company is early in its journey towards a first-of-a-kind satellite constellation and generating revenue – is unusual for government,” she said.
She has since been replaced at the department. The new Permanent Secretary for the department, Sarah Munby, started in the role this week following a cross-Whitehall competition. Munby joined BEIS a year ago from consultants McKinsey where she was a partner.
“The appointment of Sarah Munby as Permanent Secretary is very good news for the department and for this government,” said Sharma. “I would also like to pay tribute to Sam Beckett for her leadership, particularly in overseeing our support for businesses throughout this key period.”
“It has been an honour to be Acting Permanent Secretary for BEIS over the past 3 months,” said Beckett. “I am very proud of the dedication and professionalism that the department has brought to the government’s response to the coronavirus. I wish Sarah the very best of luck in leading BEIS in its important mission for the future.
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