A satellite company part-owned by the British government will be taken over by an EU rival this week, dashing hopes of fostering a UK company to rival Elon Musk’s Starlink after its taxpayer bailout in the peak of the pandemic.
OneWeb, which offers services including broadband from its low-orbit satellites, will be taken over by one of its shareholders, Paris-listed Eutelsat, in a deal that could be announced on Monday.
The deal, which will be billed as a merger, is expected to dilute the British government’s stake from almost 20% two years after it invested $500m (£416m) in the business. The new combined entity is expected to value the UK taxpayer’s stake at $600 million and place it alongside Eutelsat’s shareholders, including the French and Chinese governments. Paris and Beijing have a 20% and 5% stake in Eutelsat respectively.
Boris Johnson’s government invested in OneWeb in July 2020 to try to save it from bankruptcy when it failed to secure funding in March of that year to continue building its planned fleet of 650 satellites.
The taxpayer-funded bailout was championed by Johnson’s former adviser Dominic Cummings and came shortly after Britain was denied access to the EU’s Galileo satellite navigation system due to Brexit. The government initially argued the bid would allow it to build a British alternative, a plan experts dismissed as OneWeb’s communications satellites are radically different from those needed for a navigation system.
A source with knowledge of the government’s approach to the Eutelsat deal, which has been under negotiation since the spring, said the UK had secured a number of concessions. They include being able to veto sales of services that pose a risk to the UK’s national security, having veto rights over any decision to move OneWeb’s headquarters out of the country and having rights of first preference over the supply chain, opportunities manufacturing and release that may occur. covered by UK companies.
The combined entity is also expected to float shares on the London Stock Exchange in a secondary listing in the near future.
Although Eutelsat currently broadcasts TV channels in Russia, it is understood that the UK government hopes to sidestep criticism by ensuring that OneWeb technology is limited so that it is not used to support channels that facilitate propaganda of the Kremlin.
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OneWeb was founded in 2012 by American entrepreneur Greg Wyler with the goal of providing cheap Internet access worldwide through a network of hundreds of satellites. It filed for bankruptcy in early 2020 after it failed to secure new funding from investors, including its main backer SoftBank, the big-spending conglomerate controlled by Japanese billionaire Masayoshi Son.
Indian telecom company Bharti also invested $500 million alongside the UK government during OneWeb’s bailout, leaving it with roughly a 30% stake in the business.
Eutelsat, OneWeb and the department for business, energy and industrial strategy declined to comment.