OneWeb is back in business, thanks to $500 million of UK taxpayer money

Beleaguered communications satellite company OneWeb has emerged from Chapter 11 bankruptcy with fresh cash and a new CEO.

Just a year after bagging an additional $1.25 billion from investors (taking the total amount it had raised by that point to $3.4 billion), OneWeb threw in the towel, claiming the pandemic had scuppered its perfectly laid plans. In October its rescue by a combination of Bharti Global and the UK government was approved and now the process is complete.

The two rescuers chipped in half a billion bucks each, which reportedly bought them 84.4% of the company, with the remaining 15.6% going to existing creditors. So that seems to mean all the previous investors lost all their cash – ouch. Furthermore OneWeb seems to be immediately on the hunt for further investment, which will presumably be a tough sell.

That job will fall to former Thomson Reuters COO Neil Masterson, who takes over from the CEO who oversaw the bankruptcy, Adrian Steckel. Steckel will be kept on as an advisor to the board, however, presumably to tell them what not to do. The plan now is to get in with launching low earth orbit (LEO) satellites, with 650 being the target number to be hit by 2022. It currently has 74.

“I am looking forward to helping the OneWeb team deliver and commercialise their vision to provide internet access across the globe,” said Masterson. “OneWeb has a strong social purpose to improve the world’s access to information, which I share. It has great talent, a compelling commercial opportunity, and is supported by committed and knowledgeable owners and investors.

“Our December launch puts the UK firmly in the global space business, alongside acknowledged Indian telecoms experts, Bharti Global. OneWeb will be a model for responsible co-operation in Space.”

“These are exciting times and the world now has a LEO alternative to work with,” said Sunil Bharti Mittal, Chairman of Bharti Enterprises. “We look forward to partnering with those equally determined to enter this new Space Age. There is unmet demand around the globe for broadband connectivity and we intend to continue OneWeb’s social mission. We will use our joint venture facility to drive down cost of service, opening new use cases for low latency broadband provision.”

“This strategic investment demonstrates government’s commitment to the UK’s space sector in the long-term and our ambition to put Britain at the cutting edge of the latest advances in space technology,” said UK Secretary of State for Business, Energy and Industrial Strategy Alok Sharma.

“Access to our own global fleet of satellites has the potential to connect people worldwide, providing fast UK-backed broadband from the Shetlands to the Sahara and from Pole to Pole. This deal gives us the chance to build on our strong advanced manufacturing and services base in the UK, creating jobs and technical expertise.”

All this talk of a ‘social mission’ seems odd. As OneWeb’s previous investors know only too well, this is an expensive business. If it keeps burning through cash at the current rate, not only will it fail to achieve all these worthy goals, it will cost the UK taxpayer a ton of cash it can’t afford to lose. Even breaking even won’t be enough, it needs to make a profit.

In its quest to do so OneWeb will have to compete with the likes of Elon Musk and Jeff Bezos, who have their own LEO projects and who routinely find billions of dollars down the back of their respective sofas. It’s not immediately obvious where OneWeb is going to find the cash to take on these oligarchs but, as UK taxpayers ourselves, we wish them luck.