OneWeb, the satellite internet group recently rescued from bankruptcy, is expecting to clinch a $400m fundraising next month, its executive chairman said as the company marked a return to business with the launch of 36 satellites.
Sunil Bharti Mittal, the Indian telecoms tycoon who with the British government has taken control of OneWeb for $1bn, said two satellite operators and a financial group were in late stage discussions about investing. “We are very close . . . maybe a couple of weeks,” Mr Mittal said.
But even with an extra $400m, that leaves a further £1bn to be raised either from new investors or through debt in order to complete a constellation of about 650 low earth orbit (Leo) satellites that will deliver a global broadband service to the most remote areas of the planet.
“Conversations are going on. I don’t see any difficulty in raising this $1bn,” Mr Mittal said.
The UK’s investment in OneWeb, against the advice of senior civil servants, has been controversial with critics questioning both the due diligence that was done on the company, as well as its viability.
Mr Mittal, who runs Bharti Airtel — one of the world’s largest telecoms groups, said the group’s business plan set a target for profitability by 2024, roughly 18-24 months after completing the global broadband service by the middle of 2022.
OneWeb would initially target business and government customers, rather than retail customers, he said, dismissing concerns that the group would go head to head with Elon Musk’s Starlink in an increasingly crowded market.
Despite the fact that many satellite companies have taken a decade or more to generate profits, Mr Mittal insisted that OneWeb “will be one of the most profitable satellite companies” in the industry.
However the business model has been questioned by some in the industry, especially as billionaires such as Mr Musk and Amazon’s Jeff Bezos are also developing LEO broadband constellations.
“OneWeb has to get its satellite network done, finish the ground network and get users. This will all require a significant period of operational capital and the system will be getting old just about the time they are getting customers,” said one senior executive from a satellite company. “Will you be able to provide the service in a cost-effective way that allows you to replace the system every five to seven years?”
The executive added that Mr Musk had the financial power to subsidise user terminals, which would help to keep subscription costs down. “Last time OneWeb didn’t find investors with the patience it needed to put system in operation,” he said. “Let’s see how many billions of dollars get invested.”
However, Mr Mittal said many of the costs of developing a service will have been incurred in the first investment phase and replenishing the constellation would amount to $2.5bn, against critics’ estimates of $10bn. “We are going into this with our eyes open from a commercial standpoint. And I can tell you that this . . . is looking very healthy,” he said.
The government and Mr Mittal’s Bharti Global paid $500m each to buy OneWeb’s assets out of bankruptcy, in return for a combined stake of 84.4 per cent. The UK has a golden share in the business, controlling access to the system, which will remain regardless of its holding.
The government is hoping not only that OneWeb will help to deliver on Prime Minister Boris Johnson’s promise to bring broadband to the remotest parts of the UK, but that it could also be a vehicle for secure navigation services. The UK was barred from participation in the sensitive parts of the EU’s Galileo navigation system as a result of Brexit.
The successful launch on Friday will bring the number of satellites in orbit to 110. OneWeb aims to have roughly 16 launches in the next 18 months, Mr Mittal said. It also expected to deliver its first commercial service in October next year, covering the Arctic and parts of northern Europe.
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