Today, July 3, 2020, the United Kingdom government announced it is buying satellite broadband provider OneWeb out of bankruptcy with participation from Indian telecom provider Bharti. Her Majesties’ Government (HMG) bid around $500 million, with Bharti putting up another $500 million, and plans to add a satellite navigation component to the OneWeb constellation, but many details need to be worked out and numerous questions remain.
OneWeb filed for bankruptcy at the end of March, blaming its circumstances on the coronavirus pandemic by limiting its access to expansion capital. Analysts had predicted a trip to bankruptcy court even without COVID-19, given OneWeb’s need for $3 billion to $4 billion dollars to complete its initial constellation of 648 satellites providing worldwide global broadband. SoftBank had balked at providing more money to the company, having encountered significant problems in its investment portfolio.
The UK’s official announcement says it “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.” OneWeb is the largest deal in the UK’s efforts to build a space technology portfolio including satellite manufacturing, launch, and value-added services.
Final closure of the deal is expected to take place by the end of the year. The Financial Times says the British government should end up taking a 20 percent stake in OneWeb and becoming the company’s largest shareholder.
Bharti and the UK expect this deal to enable OneWeb to complete the construction of its global satellite constellation. Bharti was an early investor in OneWeb and expects to use satellite broadband services to increase and enhance its mobile broadband footprint in Africa and Asia.
The UK’s participation has the blessing of the U.S. government, which didn’t want to see OneWeb’s technology going to a Chinese bidder. With the UK dropping out of the European Union Galileo satellite navigation system, HMG has suggested OneWeb can be repackaged or modified to support a sovereign GPS component for civilian and military use.
However, bigger and more immediate questions loom for OneWeb. At the time of its bankruptcy, OneWeb had launched 74 production satellites into orbit, completed or designed roughly half of its ground stations, and successfully demonstrated the system could deliver broadband speeds of over 400 Mbps with latencies of around 30 ms. The company had started a launch campaign to put groups of 30 or more satellites into orbit every month through the end of 2021, an activity that will have to be restarted and include both scheduling launches and building more satellites.
While the UK government has suggested OneWeb satellite production could be brought back from the OneWeb Satellite factory – a joint venture between Airbus and OneWeb – this is unlikely to take place “as soon as possible” given it would be difficult to relocate the factory while it is cranking out several satellites per day for launch. It’s also unknown when launch operations could resume, given that the bankruptcy proceeding isn’t expected to close until the fourth quarter of this year.