A satellite broadband company bailed out by British taxpayers is preparing for blast-off after an Indian tycoon ramped up his investment.
Sunil Bharti Mittal, through his firm Bharti Global, yesterday exercised an option to increase his stake in Oneweb to 38.6 per cent.
In exchange, he will pump an extra £360million into the business – taking its fundraising since early last year to £1.7billion as it seeks to finance proposals to put hundreds of satellites into orbit.
Funding: Oneweb has raised £1.7bn since early last year as it seeks to finance proposals to put hundreds of satellites into orbit
The deal will reduce the Government’s stake in the company to 19.3 per cent, and it follows another recent investment by the state-backed French firm Eutelsat.
Japan’s Softbank, which is another backer, and Eutelsat will also control stakes of 19.3 per cent after the latest fundraising completes.
The British investment followed personal backing from Boris Johnson’s former top adviser, Dominic Cummings, despite reported opposition from civil servants.
And yesterday Kwasi Kwarteng, the Business Secretary, said the deal showed Oneweb was ‘fast becoming an asset to the British taxpayer’.
‘It’s clear that investors see a strong future for this incredible, cutting-edge company and a robust commercial case for investment,’ he added.
‘The Government’s equity stake in Oneweb not only allows the UK to deploy low-Earth orbit technology, but will put our country at the forefront of the small satellite market which is set to rapidly expand over the years ahead.’
Shravin Mittal, managing director of Bharti Global, said: ‘Bharti is delighted to show our confidence in Oneweb’s rapid progress.’
It represents a remarkable turnaround for the London firm, which just a year ago was facing collapse.
It is among several competitors that are plotting to launch hundreds of satellites into low-Earth orbit, so they can beam down broadband internet to paying customers.
Each satellite is about the size of a fridge and would sit 750 miles up. Oneweb wants to operate more than 600 of them.
But after Softbank indicated it was not prepared to put any more cash down for the expensive endeavour, the company’s future was plunged into doubt and it filed for bankruptcy protection in the US last March.
Bosses at Oneweb at first sought to tap into the UK’s coronavirus loan programmes and went knocking on doors in Whitehall, speaking to officials at the Department for Digital, Culture, Media and Sport, the UK Space Agency and the Treasury.
They argued that the company could massively boost the UK’s ambitions to be the biggest player in the space satellite sector – and that otherwise the firm risked falling into the hands of other countries such as China.
And a key breakthrough suddenly came when the company managed to turn the head of Cummings.
Bosses never met with the influential adviser, who repeatedly called for the Government to plough money into innovative technologies, but communicated with him by text and email, before being put in touch with the Treasury.
Chris McLaughlin, Oneweb’s head of government relations, said this intervention proved crucial.
‘We reached out to a number of departments in the UK government – and it was only when we caught briefly the eye of Dominic Cummings that we got a hearing.
‘He very swiftly disappeared, we then dealt with the Treasury.’
The matter was taken out of the hands of the business department, which is usually responsible for space projects, and a £400million investment was soon directly approved by Chancellor Rishi Sunak.
Personal backing: Oneweb got a hearing after it caught the eye of then Government advisor Dominic Cummings
This was reportedly against the advice of civil servants, who had warned it was a high-risk project and could turn into a waste of taxpayers’ money.
But Oneweb also needed more than what the UK alone was preparing to put up, so Johnson’s administration invited Mittal – an early backer who had withdrawn – to Downing Street and convinced him to jump on board.
The tycoon behind Airtel, who is one of India’s richest men, was personally wooed by the Prime Minister, who persuaded him to enter a partnership and put money into the company.
According to Mittal, the partnership then ‘took shape at rocket speed’.
Since then, Eutelsat has also joined the list of backers and Oneweb has resumed blasting off satellites into space.
It is due to fire another 36 of them into orbit tomorrow, meaning its overall constellation will soon number more than 200.
Ministers have argued the unusual investment by taxpayers, the likes of which hasn’t been seen since engineering giant Rolls-Royce was in state ownership, will make it easier to connect rural parts of Britain to the internet, and catapult our industry to the front of a new space race.
There were signs of that beginning to come to fruition earlier this week when telecoms firm BT signed a deal with it to use its network.
But tremendous obstacles still remain and Oneweb is competing with some of the most deep-pocketed entrepreneurs in the world, including Elon Musk, the chief of electric car manufacturer Tesla, and Amazon founder Jeff Bezos.
Musk’s Space X company is launching a constellation of satellites known as ‘Starlink’ which are already providing internet services to users.
The company already has the jump on Oneweb, having launched almost 1,500 satellites into orbit.
And Amazon, whose founder Bezos is the world’s richest person, is reportedly planning to fire another 3,000 into space to offer its own rival service. Despite this, Oneweb does have an ace up its sleeve.
The firm has retained preferential rights over certain bands of airwaves which are known as ‘spectrum’.
It is in front of Musk’s Space X in the pecking order, giving it potential advantages.
Yesterday, Oneweb chief executive Neil Masterson said the company was in a ‘powerful position’ following its funding deal and had ten more launches to go.
‘With the forthcoming launch we will have completed 40 per cent of our network,’ he said.
‘Investors have backed the extraordinary efforts of the Oneweb team.’