The UK’s Business Secretary Alok Sharma has confirmed a Government lifeline of $500 million for OneWeb, the ambitious satellite firm which recently filed for Chapter 11 Bankruptcy.
Alongside Bharti Global, the UK Government will become a ‘significant’ equity shareholder in OneWeb, posting $500 million to save the company from financial distress. While Bharti Global will take commercial and operational leadership at the firm, the UK Government will now have an ownership stake in the satellite firm as a new chapter of the Space Race develops.
“This deal underlines the scale of Britain’s ambitions on the global stage,” Sharma said. “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.”
While this could prove to be a useful investment for the UK Government as low-earth orbit satellites become more important in the patchwork of connectivity to deliver the digital economy, it also allows the firm to reduce reliance on satellite constellations provided by other parties. For Brexiteers, this might be another step to creating a more independent nation.
As it stands, OneWeb is not in a healthy position. The challenger satellite firm filed for Chapter 11 Bankruptcy in March, a process to reorganise debt, though it places limitations on the business and also extends debts for a significantly longer period. The announcement from the Department for Business, Energy and Industrial Strategy (BEIS) will come as a relief for the business.
“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 OneWeb CEO Adrian Steckel.
“The combination of HMG 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.”
Interestingly enough, the involvement of the UK Government might add much more credibility to the connectivity chapter of the Space Race.
While there is plenty of excitement regarding the potential of low-earth orbit satellites in plugging the connectivity holes of the digital economy, the hype is thus far unproven. This perhaps explains why the rush to launch mobile broadband capable satellites is being funded by ambitious billionaires as opposed to the traditional moneymen of the big banks. Aside from OneWeb, Elon Musk’s SpaceX Starlink or Jeff Bezos’ Project Kuiper are the two other projects worth paying attention to.
Investment in ideas often goes on the same hype curve as every other element of life. Niche private equity firms or individual investors usually fuel embryonic ideas as banks, pension funds and institutional investors take more traditional, risk-adverse routes. A significant investment from an influential Government is not only a tick for OneWeb, but also a mark of credibility for the sub-sector on the whole.