Government closes OneWeb buyout
The government has completed its acquisition of bankrupt satellite firm OneWeb.
First announced in July, the buyout will see the government and Indian telecoms outfit Bharti jointly acquire OneWeb for a price of $1bn. The satellite firm, which was founded in the Channel Islands in 2012, filed for bankruptcy in March.
It cited the “financial impact and market turbulence” resulting from the coronavirus crisis as a reason why it had been unable to secure further funding. The bankruptcy filing kick-started a bidding process in which the UK-Bharti bid saw off competition from a number of other interested parties.
During its eight years in existence the company has received cumulative backing of $3.3bn, despite being yet to generate any revenue – let alone profit.
But, according to the government, OneWeb will begin offering broadband commercially “to the UK and the Arctic region in late 2021, and will expand to delivering global services in 2022”.
Business secretary Alok Sharma said: “This strategic investment demonstrates government’s commitment to the UK’s space sector in the long-term and our ambition to put Britain at the cutting edge of the latest advances in space technology. Access to our own global fleet of satellites has the potential to connect people worldwide, providing fast UK-backed broadband from the Shetlands to the Sahara and from pole to pole. This deal gives us the chance to build on our strong advanced manufacturing and services base in the UK, creating jobs and technical expertise.”
Shortly after the deal was announced, it emerged that Sharma that pushed on with the deal despite leading civil servants at the Department for Business, Energy and Industrial Strategy flagging up “significant downside risks” to the potential deal.
This news came shortly after science minister Amanda Solloway had faced parliamentary questions about whether the government would see any return on its £400m investment.
“This investment is likely to make an economic return, with due diligence showing a strong commercial basis for investment,” she said.
Announcing the closure of the deal, the government said that it believes the buyout will serve as a “platform to promote UK jobs and supply chains”.
It added that, in addition to offering business-grade broadband, OneWeb’s services “could also improve connectivity in a broad range of sectors, including aviation, maritime, government, and enterprise customers, unlocking digital services and applications in a wide range of locations that historically have not [had] access to low-latency broadband connectivity”.
The company currently has a fleet of 74 satellites in orbit and next month aims to launch a further 36.
Graham Turnock, chief executive of the UK Space Agency, said: “This landmark government investment marks the start of an incredibly exciting period for OneWeb and the whole UK space sector, which can play a vital role in our economic recovery. Global connectivity has never been more important and there is a significant opportunity for satellite constellations to deliver a range of valuable services to consumers, businesses and government.”
Sunil Bharti, chairman of Bharti Global, added: “Together with our partners at HMG, we are looking forward to a new Low Earth Orbit opportunity. Innovation, resilience and growth in the high-tech sector are all served by this powerful global opportunity. By the end of 2022, OneWeb will be a truly global force for good.”
The government said that it would “will have a final say over any future sale” of OneWeb, and would also be able to intervene if it had national security concerns about other countries accessing its technology.