The UK government says it has acquired London-based satellite operator OneWeb in a $1bn deal with an Indian mobile operator linked to an existing investor.
The UK government will pay $500m for a ‘significant equity share’ alongside $500 million from Bharti Global which owns the third largest mobile phone network.
It will also set up a National Space Council, chaired by finance minister Rishi Sunak, the Chancellor of the Exchequer, to look at space policy and wider national security issues. This will include manufacturing capacity and an alternative navigation data service.
Bharti will provide the OneWeb commercial and operational management and bring a revenue stream for the constellation of 648, 150kg, satellites (above) in polar low earth orbit (LEO). The company had 74 satellites in orbit before it went into Chapter 11 in the US and still needs to build and launch the others to provide a full service.
It had begun development on a range of user terminals for a variety of customer markets and has half of its 44 ground stations completed or in development.
OneWeb was looking for an additional $1bn investment to do this on top of the $3bn venture capital backing to date. The investment from the UK government and Bharti will see the venture through to an early commercial launch, but payments to the main creditor, OneWeb Global, and WorldView JV Holdings, the US-based satellite manufacturing joint venture with Airbus, will reduce that amount. The answer may lie in OneWeb’s statement that the deal is worth “more than $1bn.”
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The investors in the last $1.3bn venture capital round were Japanese giant Softbank, Qualcomm, Grup Salinas and the government of Rwanda. HOwever, Softbank also led the previous $1.2bn round with Sunil Bharti Mittal, founder of Bharti Enterprises.
“We are delighted to have concluded the sale process with such a positive outcome that will benefit not only OneWeb’s existing creditors, but also our employees, vendors, commercial partners, and supporters worldwide who believe in the mission and in the promise of global connectivity,” said Adrian Steckel, current CEO of OneWeb.
“The combination of HMG [Her Majesty’s Government] and Bharti will bring immediate value as we develop as a global leader in low latency connectivity. This successful outcome for OneWeb underscores the confidence in our business, technology, and the work of our entire team. With differentiated and flexible technology, unique spectrum assets and a compelling market opportunity ahead of us, we are eager to conclude the process and get back to launching our satellites as soon as possible,” he said.
The investment intended to boost volume satellite manufacturing in the UK, which is why the National Space Council is a key move. OneWeb had applied to the US regulator, the FCC, in May to expand its constellation to 48,000 satellites which would cost well over $50bn. The satellites are currently built by Airbus in Toulouse, France, and the joint venture in Florida.
The deal also talks about novel satellite technologies, referring to its intention to add a positioning service to the satellites. It gives the UK government a final say over any future sale of the company, and over future access to OneWeb technology by other countries on national security grounds. The Chinese and French governments had also been cited as potential buyers.
The deal is subject to US court approval and regulatory clearances and is expected to close before the end of the year.
“This deal underlines the scale of Britain’s ambitions on the global stage,” said Business Secretary Alok Sharma. “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.”
There is precedent for such a deal. Iridium for example went bankrupt in 1999 after spending $5bn on building a LEO constellation of 66 satellites but is operating effectively today.
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