UK buys £400m stake in bankrupt satellite rival to EU Galileo system

Investment with India made in US firm OneWeb after Brexit locks UK out of Europe’s satellite navigation system

The UK government has pledged to invest $500m (£400m) in bankrupt satellite company OneWeb, giving it a stake in a business that provides broadband from space.

The government, which has proven so far unwilling to take stakes in major British companies hit by the coronavirus pandemic, will receive a “significant equity share” in the loss-making company as it seeks to make “high-risk, high-payoff” investments of the kind advocated by 10 Downing Street adviser Dominic Cummings.

The deal, which is still subject to US court approval, is expected to close before the end of the year. It includes a pledge to bring manufacturing of OneWeb’s satellites to the UK, where it is headquartered.

Indian telecoms company Bharti will also invest $500m, which will “bring OneWeb a revenue base to contribute towards its future success”, the government said on Friday. Much of India does not have access to high-speed internet.

Downing Street said: “The deal will support the UK to be a pioneer in the research, development, manufacturing, and exploitation of novel satellite technologies, whilst boosting UK manufacturing.”

The investment is backed by the Unite trade union, which represents many aerospace manufacturing workers, in the hope it will bring secure, high-skilled jobs for workers.

However, some space experts have raised concerns over the suitability of its technology for navigational purposes. The government had ambitions to create its own rival to the US’s global positioning system (GPS), although it had reportedly scaled back those plans. The UK has been barred from the EU’s Galileo system because of Brexit.

Dr Bleddyn Bowen, a space policy expert at the University of Leicester, told the Guardian last week it was a “tech and business gamble” that the satellites could be redesigned to allow navigation. The existing major satellite navigational systems all use satellites orbiting about 20,000km from the Earth’s surface, compared with only 1,200km for low-Earth orbits.

OneWeb’s network has been described as unsuitable for navigational purposes by the UK’s own space agency, according to internal documents cited by the Daily Telegraph. A spokesman for the agency declined to comment on the documents.

Graham Turnock, the UK Space Agency chief executive, said: “Now is the right time to look at new ways to use space to boost the UK’s prosperity, security and global influence, while benefitting people across the whole country.”

The satellites were previously built in the US by Airbus, the European aerospace manufacturer, which was also an investor in OneWeb. OneWeb’s main competitor in low-Earth orbit satellites is Starlink, the satellite company run by the billionaire Elon Musk’s SpaceX.

OneWeb was founded in 2012 by American businessman Greg Wyler with the aim of providing cheap internet access around the world through a network of hundreds of satellites. OneWeb had raised $3.4bn in equity and debt to fund its “constellation” of 74 satellites, with plans for a network of 650 covering the globe. However, it failed to secure new funding at the end of March from investors including its largest backer SoftBank, the big-spending conglomerate controlled by Japanese billionaire Masayoshi Son. OneWeb filed for chapter 11 bankruptcy in the US at the end of March to try to find a buyer.

Alok Sharma, the business secretary, said: “This deal underlines the scale of Britain’s ambitions on the global stage.

“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.”

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The deal will give the UK a “sovereign global satellite system”, as well as “strategic opportunities across a wide range of other applications”, the government said.

Sunil Bharti Mittal, the chairman of Bharti Enterprises, said the low-Earth orbit satellites were the “only viable mechanism through which the ‘last billion’ can be connected”, referring to the roughly 1 billion people in regions such as sub-Saharan Africa and India who do not have internet access.

The UK will have a final say over any future sale of the company, and over future access to OneWeb technology by other countries on national security grounds.


Jasper Jolly

The GuardianTramp

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