UK heads into space with role in $1bn bid for OneWeb

UK heads into space with successful role in $1bn bid for OneWeb

06 July 2020 | Alan Burkitt-Gray

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The UK and the owner of Indian operator Bharti Airtel are set to own a 90% stake in bankrupt satellite company OneWeb after winning an auction on Friday evening.

Each of the two partners will pay US$500 million for their share, though the deal has still to be approved by OneWeb’s creditors, the US bankruptcy court and regulators in several countries.

OneWeb went into Chapter 11 bankruptcy protection in late March after its existing funders, primarily SoftBank, refused to pay more to complete the initial plan to build and launch 648 satellites. OneWeb blamed Covid-19 for its problems.

Existing investors will retain the last 10% of OneWeb, according to Bloomberg. These include Airbus, Coca-Cola, Hughes, Intelsat, which is also in Chapter 11, Qualcomm and Virgin Group, as well as SoftBank.

Partners to the deal expressed delight. Neither of the prospective purchasers, nor OneWeb itself, commented on last week’s suggestion that the satellites could be used as a UK alternative positioning system, competing with the US-owned GPS, Europe’s Galileo and others.

Instead, all talked of maintaining OneWeb’s original mission of providing a global internet access service, with low latency because of the satellites’ low orbits.

Business Secretary Alok Sharma (pictured) said: “This deal underlines the scale of Britain’s ambitions on the global stage. 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.”

His statement avoided mentioning that OneWeb already has a huge factory, partly funded by the state of Florida, close to Cape Canaveral and the Kennedy Space Center.

In May, two months after going into Chapter 11, OneWeb announced plans to increase the number of satellites in its constellation up to 48,000. “This larger OneWeb constellation will allow for greater flexibility to meet soaring global connectivity demands,” it said.

Sunil Bharti Mittal, chairman of Bharti Enterprises, said: “This business has substantial commercial use cases across the telecoms, enterprise, aviation and maritime sectors. With strong operational execution, we will be able to generate an attractive return for investors, while ensuring that Britain plays a leading role in space and next generation communications.”

OneWeb originally said that, once it is in commercial operation, it will offer download speeds of up to 195Mbps and upload at up to 32Mbps. However, tests with the first 74 satellites in service have delivered broadband speeds of more than 400Mbps with average latency of 32ms.

Adrian Steckel, CEO of OneWeb, commented: “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.”

Bharti Mittal added: “OneWeb’s platform will help to reduce the ‘digital divide’ by providing high speed, low latency broadband access to the poor and hard-to-reach rural areas. A low-earth orbit constellation is the only viable mechanism through which the ‘last billion’ can be connected.” Mittal’s son, Shravin Bharti Mittal, leads Bharti Global.

The UK government’s statement said: “Bharti Global … will provide the company commercial and operational leadership, and bring OneWeb a revenue base to contribute towards its future success.”

OneWeb said that Bharti Airtel – the group’s telecoms operations, in India and Africa – “will act as the testing ground for all OneWeb products, services, and applications. 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.”

The UK also said that “the UK will further develop its advanced manufacturing base, making the most of its highly skilled workforce as the hardware is further developed and equipment and services are deployed to make the most of this unique capability” – raising questions over the future of the Florida factory.

The UK government said 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”.

Sharma said the UK “will have a final say over any future sale of the company, and over future access to OneWeb technology by other countries on national security grounds”.

OneWeb said it believes “The bid is designed to capitalise the company sufficiently as a going concern to effectuate the full end-to-end deployment of the OneWeb system.”

It added: “The consortium’s winning bid represents a strong offer that will enable OneWeb to successfully emerge from the Chapter 11 process with a robust foundation on which to continue its progress towards commercial operations and secure OneWeb’s position as a global leader in low latency connectivity.”