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Laurie Clarke

Reporter

Government bets £400m on bankrupt satellite company

The government has spent $500m (£400m) on a 45 per cent stake in bankrupt satellite company OneWeb.

The company had been in the process of building a network of 650 satellites positioned 1200km from Earth to transmit broadband and 5G coverage across the globe.

However, it was only able to populate the atmosphere with 75 satellites before the Covid-19 pandemic struck – the fallout of which the company blames for not being able to raise the required amount of funding.

By comparison Starlink, owned by Elon Musk – who also bid for the failed company – has 500 satellites currently in operation and plans to launch another 50 this month.

OneWeb filed for bankruptcy in March, triggering a bidding race for its assets.

The UK has just won the bidding war as part of a consortium with Indian mobile network operator Bharti Global. But it will need to wait until 10 July for confirmation of the deal, when the US Bankruptcy Court for the Southern District of New York will rule on the sale.

The motivation for the bid is three pronged. The first is the hope that it might be able to replace EU’s Galileo sat-nav system, which the UK was cut out of following brexit.

The second is the networks’ potential impact on bolstering the UK’s commercial space ambitions. Business Secretary Alok Sharma said it would help deliver the “first UK sovereign space capability” and that the deal “underlines the scale of Britain’s ambitions on the global stage”.

As a “high risk, high pay-off” science project, it has the hallmarks of a Cummings-driven call. Indeed, the FT notes he was instrumental in urging the investment. In his blog, Cummings has proselytised about potential UK space projects, like building a manned base on the moon.

Finally, there is the belief that the satellite network could provide hope for the UK’s beleaguered 5G roll-out, which has been marred by prolonged prevaricating over whether to include Huawei in the network or not.

The capability to beam 5G down from the atmosphere could minimise the need to use Huawei equipment on the ground – something that would prove enticing for operators threatened by the prospect of a Huawei ban.

As part of the deal, moving some of the manufacturing to the UK has been discussed.

“The IoT’s conquest of space has gained momentum in recent years, with the launch of several high-profile ventures as part of the ‘NewSpace’ movement, involving the development of the private spaceflight industry,” said Sam Lucero, senior principal analyst, IoT at Omdia. “These ventures, including SpaceX’s Starlink, Amazon’s Project Kuiper, and Softbank-backed OneWeb, are bringing satellite-based broadband Internet access to areas underserved by terrestrial networks, and are helping to build credibility and investment for satellite operators focused on the IoT market opportunity, as well.”

The UK’s satellite industry has traditionally punched above its weight, with a report from 2016/17 showing that UK space industry accounted for an income of £14.8bn and 41,900 jobs.