French close in on OneWeb satellite deal
A SATELLITE firm rescued by taxpayers is in talks to merge with the French as it battles to compete with rivals such as Elon Musk’s Starlink project.
The deal would see Londonbased OneWeb join forces with France’s Eutelsat, in which China’s sovereign wealth fund has a 6pc shareholding.
It is also expected to represent a paper profit of around £80m for the Government, with the stake it bought for £420m two years ago valued at around £500m.
The deal is likely, however, to face political scrutiny at a time when Britain’s stance on Chinese investment is under the spotlight during the Tory leadership election.
OneWeb is a pioneer of networks of so- called lower- earth orbit (LEO) satellites, aimed at allowing access to high-speed internet where traditional ground infrastructure is hard to reach.
Applications can include broadband on aeroplanes and remote locations such as parts of the Third World, as well as the farthest-flung reaches of the UK.
OneWeb needs £1.7bn to £2.5bn of investment to complete its network and update its technology and the deal is seen as helping to accelerate that process.
Taxpayers would own around 10pc of the company, and have a seat on the board, with France – a big shareholder in Eutelsat – having a slightly larger stake.
The combined entity, while having its primary listing in Paris, would also be expected to launch a secondary listing in London.
After the all- share deal, which would involve the issue of new Eutelsat shares, China Investment Corporation’s stake in the merged entity would be 1.8pc.
OneWeb itself would remain a UKbased company within the larger group and the Government would retain its ‘special share’ allowing it to veto any move abroad.
Britain would have the power to block sales for national securityrelated applications and relationships seen as compromising its relationships with the US, Australia, Canada and New Zealand, the other countries in the ‘Five Eyes’ intelligence-sharing network.
The deal with Eutelsat is being seen as vindication for the decision by the Government to plough taxpayers’ money into the company to rescue it. The investment, said to have been championed by Boris Johnson’s former adviser Dominic Cummings, was reportedly made in spite of opposition from senior officials.
Eutelsat confirmed yesterday it was ‘engaged in discussions’ with fellow shareholders in OneWeb – in which it already owns a 23pc stake – about a deal. Those include Bharti, led by billionaire Sunil Mittal, chairman of OneWeb.
Investors gave the plan the thumbs down yesterday with Eutelsat stock falling by 17.8pc, or ¤1.86, to ¤8.57.
Analysts at Credit Suisse said: ‘From an anti-trust point of view, this deal is likely to be scrutinised heavily and will also likely need political consensus from both the UK and EU at a time when the UK is choosing a new Prime Minister.’
A government spokesman said its ‘ strategic investment in OneWeb demonstrates a commitment to the UK space sector for the long term’.