The Japanese technology investor SoftBank has invested $350 million into OneWeb, the British satellite-based internet start-up, just a year after forcing the company into bankruptcy. In early 2020, SoftBank, at the time OneWeb’s major shareholder, declined to participate in an emergency funding round. The result was Chapter 11 bankruptcy, which the UK government and Indian telecoms entrepreneur Sunil Bharti Mittal paid $1 billion to buy the start-up out of.
SoftBank still owned around 9% of OneWeb, having agreed to convert $90 million of debt into equity as part of the deal that saw the start-up salvaged. The new investment means that stake has now been increased back up to 30%, with the UK taxpayer and Mr Mittal’s 42.2% stakes reduced to roughly the same level.
With the UK having invested in OneWeb as a ‘strategic’ national asset, the government will retain a ‘golden share’, despite the dilution of its stake. That guarantees the county control access to the system.
Another investor to up their stake in OneWeb is Hughes Network Systems, a subsidiary of U.S. satellite communications firm EchoStar. Having invested $50 million last year alongside the UK government and Mr Mittal, Hughes Network Systems is upping that by another $50 million. The most recent investment was part of last year’s original agreement.
OneWeb commented on the new investment round:
“The UK government, SoftBank and Bharti [Mr Mittal] will have very similar percentages in a company that is worth considerably more. They have created value for the UK taxpayer.”
OneWeb’s equity increased from $1 billion to $1.4 billion as a result of the buyout and the latest financing. The company is still looking to raise a further $1 billion, from either new investors or debt. That will provide it with enough funds to launch its full planned constellation of 648 low orbit satellites – enough to offer a broadband internet service to even the world’s remotest regions.
Discussions with potential new investors, including sovereign wealth funds, are understood to be ongoing. SoftBank chief executive Masayoshi Son, commented on his company’s decision to re-engage with OneWeb as a major investor with:
“We are excited to support OneWeb as it increases capacity and accelerates towards commercialisation.We are thrilled to continue our partnership with Bharti [Mr Mittal], the UK government and Hughes to help OneWeb deliver on its mission to transform internet access around the world.”
OneWeb has also cut its cloth to keep funding needs in check while it commercialises and starts to generate revenues. Originally, the company had informed regulators of a planned 48,000-strong satellite constellation. It recently asked regulators to reduce the size of the proposed fleet to 6372 satellites. As satellite technology develops, future constellations could well be even smaller.
OneWeb’s competitors for low orbit satellites-based internet include Elon Musk’s Starlink, which has regulatory permission for 40,000 low-orbit satellites and has applied for operating licenses in Europe. It’s already offering trial services in the USA and has over 600 satellites in orbit so far. OneWeb has launched 110 having fallen behind during its year of bankruptcy.
However, there is confidence within OneWeb that despite the major resources at the disposal of Starlink and other competitors, it can deliver on its business model. OneWeb’s strategy is to target a corporate and government, rather than mass-market client base.
The UK’s new business secretary Kwasi Kwarteng is also optimistic success for investors in OneWeb will attract more money into the UK’s space sector. Commenting on the investment yesterday he said:
“Today’s investment brings the company one step closer to delivering its mission to provide global broadband connectivity for people, businesses and governments, while potentially unlocking new research, development and manufacturing opportunities in the UK.”