UK government commits $500 million in bid to rescue bankrupt OneWeb

A OneWeb satellite inside the company’s factory in Florida. Credit: OneWeb Satellites

The UK government and India’s Bharti Global mobile telecom operator announced Friday they placed the winning bid to purchase OneWeb, which filed for bankruptcy in March while in the early stages of deploying a megaconstellation of broadband satellites.

The $1 billion purchase agreement includes $500 million each from the UK government and Bharti Global, and OneWeb said in a statement the deal would “capitalize the company sufficiently” to complete “the full end-to-end deployment of the OneWeb system.”

“The move signals the government’s ambition for the UK to be a pioneer in the research, development, manufacturing, and exploitation of novel satellite technologies through the ownership of a fleet of low Earth orbit satellites,” the UK Department for Business, Energy and Industrial Strategy said in a statement.

“The deal will enable the company to complete construction of a global satellite constellation that will provide enhanced broadband and other services to countries around the world,” the department said.

The UK government and Bharti Global lead the consortium that placed the winning bid in the court-supervised sale of OneWeb. The transaction is subject to court and regulatory approvals.

The acquisition of OneWeb by the UK government is part of an effort by British officials to field a domestic satellite navigation network. The UK’s withdrawal from the European Union on Jan. 31 forced Britain to drop out of participation in the EU’s Galileo navigation network.

British military forces can still access Galileo’s open service, which are available free of charge around the world. But Galileo’s most secure encrypted navigation signals, known as the Public Regulated Service, will be unavailable to UK troops, airplanes and naval ships.

Bharti Global, through Bharti Airtel, is the third largest mobile operator in the world, with more than 425 million customers. Bharti Airtel will “act as the testing ground for all OneWeb products, services, and applications,” OneWeb said.

“Bharti will contribute significant contract value to OneWeb through its presence across South Asia and Sub-Saharan Africa, where the terrain necessitates the use of satellite-based connectivity, providing a near-term anchor customer for large-scale global deployment of OneWeb’s services,” OneWeb said.

The UK government is expected to take a 45 percent equity stake in OneWeb.

OneWeb filed for Chapter 11 bankruptcy protection in the United States in March after launching 74 of a then-planned 648 satellites, furloughing much its staff while keeping a skeleton team on-board to continue safely operating the spacecraft already in orbit.

In March, OneWeb said it was unsuccessful in efforts to raise additional money to fund the company’s satellite constellation and the start of of commercial services.

OneWeb is headquartered in London with a significant workforce in the United States, and the company’s spacecraft are built near the Kennedy Space Center in Florida by a joint venture between OneWeb and Airbus named OneWeb Satellites.

OneWeb faces intense competition from deep-pocketed entrepreneurs like Elon Musk and Jeff Bezos. Musk’s SpaceX is working on the Starlink network, and Amazon has plans for its own satellite constellation named Kuiper to provide broadband connectivity from space.

The Japanese conglomerate SoftBank invested $2 billion into OneWeb since 2016, making the Japanese holding company OneWeb’s largest financial backer. In total, before the bankruptcy, OneWeb had announced $3.4 billion in money raised from SoftBank and other investors, including Richard Branson’s Virgin Group, Qualcomm, Airbus, Coca Cola, Intelsat, Hughes Communications, and the Mexican conglomerate Grupo Salinas.

But that wasn’t enough to carry OneWeb through the fully deployment of nearly 650 satellites to beam Internet signals worldwide.

The $1 billion in fresh capital from OneWeb’s acquisition by the UK government and Bharti Global could allow OneWeb to rehire staff and continue building and launching satellites. But OneWeb will likely need more than $1 billion to build out its entire network, according to industry analysts.

OneWeb said the company’s purchase by the UK government and Bharti Global is expected to close by the fourth quarter of 2020.

“In the meantime, the purchasing consortium will work with the OneWeb management team to further develop the strategy and business plan and to resume the Company’s launch schedule,” OneWeb said.

Illustration of OneWeb’s satellite network. Credit: Airbus

Adrian Steckel, OneWeb’s CEO, said the UK government and Bharti will “bring immediate value” to the company.

“This successful outcome for OneWeb underscores the confidence in our business, technology, and the work of our entire team,” Steckel said in a statement. “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.”

The French launch services provider Arianespace is OneWeb’s launch contractor, handling procurement of Soyuz boosters from Russian suppliers and overseeing launch campaigns. OneWeb signed a contract with Arianespace in 2015 for 21 Soyuz launches.

OneWeb also signed a contract last year to launch a cluster of satellites on the inaugural flight of the new European Ariane 6 rocket.

OneWeb was founded in 2012 by Greg Wyler, a satellite and telecom entrepreneur who dreamed of a global satellite fleet to provide Internet services to people unable to connect to terrestrial networks.

Last month, OneWeb filed a request with the Federal Communications Commission to increase the number of satellites in its constellation to 48,000.

“This larger OneWeb constellation will allow for greater flexibility to meet soaring global connectivity demands,” OneWeb said.

At least some of OneWeb’s satellite production could be moved to Britain from Florida.

“This deal underlines the scale of Britain’s ambitions on the global stage,” said Alok Sharma, UK business secretary. “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.”

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