It’s still baffling that we don’t know exactly the size of the stake that the UK government now owns in OneWeb, but we do know that it paid $500 million for what it is calling a controlling share of the bankrupt satellite network operator. Bharti also pitched in $500 million, and if Bloomberg can be trusted, the two own 90% of OneWeb.
However, Bloomberg certainly can’t always be trusted, as seen in the Super Micro debacle, but most of the press seems to be repeating its claims. To this end, it is thought that the UK government owns 45%, with Bharti owning another 45%, and the original OneWeb investors stuck with the remaining 10%. Again, if that is the case, we still aren’t sure why the UK thinks it has control.
Such control is a pretty important factor, if OneWeb is to become the critical national infrastructure that the Conservative Party says it will. In our article last week, the collective reporting was saying that the UK was purchasing a 20% stake, and while it turns out that we needed to add 25 points to the figure, our initial complaints still stand. As both parties have pitched in $500 million, it would be strange if the UK somehow got more than Bharti.
This deal is expected to be completed by the end of the year, by which point, we hope there’s some clarity about how exactly the UK is going to turn the broadband constellation into something that can provide the positional capabilities the country needs. Brexit has locked the UK out of the EU’s Galileo constellation, which itself was a response to unease about the US providing ongoing access to GPS – and Russian or Chinese alternatives are not viable either.
Alternatively, OneWeb could be put to use as a state-owned national broadband provider, but that would be anathema to the Conservative way of doing things. In a similar vein, if the goal is to become an international ISP, then it seems SpaceX is already leagues ahead, planning to launch commercial Starlink services this year, with Amazon’s Project Kuiper looming in the wings.
However, the official announcement does mention “millions of people worldwide” being connected to the internet for the first time, so it seems that there is a plan in place to become a major ISP. Bharti’s involvement suggests that India will be a primary focus, but if this is the case, then OneWeb faces a conflict of interest from the off.
On the one hand, the UK wants a military-grade communications and positioning platform for its national infrastructure – both in the UK. On the other, Bharti would want a very low-cost broadband network, able to bring internet connectivity to some of the lowest ARPU regions in the world.
It is not clear how those two positions can be suitably reconciled. New satellites seem an absolute requirement, and while the announcement talks of “increasing UK-based manufacturing,” it should be stressed that OneWeb already has a joint venture to build satellites with Airbus in the US.
The space sector is a $380 billion industry for the UK, but the vast majority of this value is tied up in manufacturing. The country has essential zero launch capabilities, and its investments in space ports seem token at best. Many of the initial criticism of the acquisition centered around this aspect, that if the government wanted to boost the UK’s position on the global stage, it should be investing in its start-up community and launch infrastructure, not an already-failed business.
ViaSatellite has an interview with Mark Garnier, vice chair of the parliamentary All Party Space Group, where Garnier argues that “the British government can probably do more with OneWeb than maybe other operators can. Given that we can redesign 78 of the satellites to become a navigation system, that is an important thing that others might not necessarily want out of it. You are inevitably going to get people saying that we paid too much. Time will tell in terms of what we get out of it. It is not only internet 5G connectivity, but secure government communications, as well as a satellite navigation system. It shows proper commitment on behalf of the UK.”
Garnier also said that the UK Space Agency was not meeting its performance goals, which suggests that the government looked to the private sector as an alternative route – acquiring spectrum and orbit licenses.
For now at least, this seems like the beginning of a quiet period for OneWeb. It has new owners, who are likely going to overhaul operations significantly, but dirty laundry is unlikely to be aired publicly. We anticipate a surge of leaks, as senior staffers attempt to curry favor and throw rivals under their respective buses, and with OneWeb now being a political vehicle, this means a whole new class of hangers-on can start using it for their own career ambitions.