MPs to investigate $500m ‘gamble’ to acquire bankrupt satellite firm OneWeb

Linda J. Dodson

In a letter on June 26 to Mr Sharma, Mr Beckett said while the UK could make around a 20pc return on the deal, there were “significant downside risks, including that venture capital investments of this sort can fail, with the consequence that all the value of the equity can be lost”.

Mr Sharma responded by “formally directing” Mr Beckett to sign off the deal. The Business Secretary added there was a “rational”  commercial case for investing in the company, as well as benefits to rural broadband and signalling Britain’s strategic space ambitions.

OneWeb originally went bankrupt in March. The satellite company had been building a broadband network of 650 satellites but after spending more than $3bn on the technology, its biggest investor pulled out.

Despite months in which to consider a bid, the UK only entered the auction for OneWeb at the last minute. It bought a 45pc stake in OneWeb with Indian conglomerate Bharti Enterprises, which acquired another 45pc for a total of $1bn. The deal is said to have been supported by Dominic Cummings, the Prime Ministers top advisor.

The deal comes after Brexit led to the UK being locked out of Galileo, a rival European effort to build a global satellite navigation system. 

The Government sees the acquisition of OneWeb, which is headquartered in the UK but with substantial US operations, as a way to participate in the global space race. The satellites could provide a way to build a rival to GPS or the EU’s Galileo, since its hundreds of satellites can be used to provide a positioning system. 

But the deal has drawn criticism. The UK Space Agency privately warned officials the OneWeb deal “should be considered not viable” as a GPS rival, the Telegraph revealed in June.

Source Article

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