OneWeb leadership changes leads to financial questions

Last week, satellite broadband provider OneWeb announced it appointed a new CEO and relocated its former CEO into the role of President and COO.  The management shuffle has stirred up concerns of escalating satellites costs and tightening access to capital for the service provider.

OneWeb appointed Adrian Steckel as Chief Executive Officer while Eric Béranger move to President and Chief Operating Officer. Steckel has been brought on to pursue additional financing as Béranger focuses on operations and building the company.

An initial press announcement from Steckel’s previous employer, Uphold, put a price tag of $6 billion for OneWeb’s efforts – a figure far above the previously cited $3.5 billion necessary to build and launch around 900 satellites for the company’s first-generation low Earth orbit (LEO) constellation.

Since its founding in 2012, OneWeb has raised more than $2 billion and says it is “on track” to being commercial services in 2020.  However, Space News reports the cost of building OneWeb communications satellites has gone up significantly from the company’s initial estimates.  In 2015, OneWeb set a goal of building a satellite at a cost of $500,000 or less.  Béranger now says the cost per satellite will be $1 million or less while industry analysts believed the cost-per satellite would run between $700,000 to $900,000 in serial production.  Airbus has created a purpose-built factory in Florida to crank out up to three satellites per day for OneWeb and has been shopping around for other customers to take advantage of the production line.

OneWeb planned to use debt financing to generate the rest of the money needed to complete buildout of the system. Space Intel Report says OneWeb had expected to secure debt financing from Bpifrance, formerly known as Coface, France’s export credit agency.  Bpifrance wants to see more customer commitments in hand and now are setting fresh conditions on OneWeb financing.

Perhaps not coincidentally, LeoSat announced this week it has secured $1 billion in enterprise customer commitments.

Space Intel Report says there’s speculation within the industry for OneWeb and Telesat to merger their LEO broadband constellation plans and concerns of OneWeb going south casting a cloud over other constellation plans both in broadband and the Internet of Things (IoT) space.

Doug Mohney

Doug Mohney, a principal at Cidera Analytics, has been working and writing about IT and satellite industries for over 20 years. His real world experience including stints at two start-ups, a commercial internet service provider that went public in 1997 for $150 million and a satellite internet broadband company. Follow him on Twitter at DougonTech or contact him at dmohney139 (at) gmail (dot) com.

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