UK government pays $500 million for stake in space startup OneWeb

OneWeb's emergence from bankruptcy means buyout by the UK government and Bharti Global can go ahead.

Broadband satellite constellation firm OneWeb announced last week that it had completed all relevant regulatory approvals to allow the sale of the company to a new group led by the UK government and Indian conglomerate Bharti Global.

As part of the deal, the British government and Bharti Global will each pay $500 million to own 84.4 per cent of the firm. The balance will be owned by SoftBank, Airbus and other existing creditors of the company.

Last month, a New York bankruptcy court approved the sale of the failed space start-up to the UK government and Bharti Global. Bharti subsidiary Airtel is India's second largest mobile communications provider.

OneWeb's sale will come with a change in leadership, with Neil Masterson taking over as the new CEO, replacing Adrian Steckel. Masterson was formerly Co-COO at Thomson Reuters

OneWeb was established in 2012 with the aim of developing advanced satellite technology to deliver Internet service in remote parts of the world, with plans to launch 650 low-Earth-orbit satellites to achieve the ambitious goal of becoming a global commercial Internet service provider by 2022.

The company has 74 satellites in space and intends to launch another 36 satellites next month.

But, in March 2020, the company collapsed after Softbank, OneWeb's biggest shareholder at that time, stepped back from further investment in the project.

In July, the UK government announced it would take a $500 million stake in the company with Bharti Global taking an equal-sized share.

OneWeb's emergence from Chapter 11 bankruptcy allows the deal to go ahead and is expected to give a significant boost to the UK's aspirations to become a major commercial space player and to develop advanced positioning technology that could be used to bolster security alliances with other countries.

The initial focus of the OneWeb will be on delivering a viable Internet service to the UK and the Arctic region by autumn of 2021.

"This deal gives us the chance to build on our strong advanced manufacturing and services base in the UK, creating jobs and technical expertise," said Alok Sharma, business secretary.

The British government's decision to invest in OneWeb has been controversial, drawing significant criticism from several MPs about the use of taxpayer's money to rescue a failed company. The UK Space Agency was also opposed to the government's investment in OneWeb.

The proponents of the deal, however, say they are confident that a satellite constellation can deliver a range of services beyond internet connectivity.

"This is a significant strategic investment, demonstrating the government's commitment to the UK's space sector and ambition to put Britain at the forefront of a new commercial space-age," the UK government said in a press release.

OneWeb's main rival in the constellation field will be Starlink, a startup by Elon Musk's rocket company SpaceX, which has already sent over 700 satellites in orbit and has also begun beta testing with customers.

But, the two projects are following different business models. While Starlink will be selling services directly to the consumer, OneWeb will be working with partner telecom firms to deliver its broadband connections.

"I am looking forward to helping the OneWeb team deliver and commercialise their vision to provide internet access across the globe," said Neil Masterson, the new CEO of OneWeb.

"OneWeb has a strong social purpose to improve the world's access to information, which I share. OneWeb will be a model for responsible co-operation in space."