Share crash over Oneweb takeover risks taxpayer loss

THE taxpayer risks losing tens of millions of pounds in a takeover of the state-backed satellite operator Oneweb by a French rival after investors baulked at the deal.

Shares in Eutelsat, a Paris-listed satellite company, plunged 17pc yesterday after executives confirmed it was in merger talks with the British business.

Oneweb’s shareholders include the UK Government after it was bailed out by Boris Johnson.

Eutelsat, France’s biggest satellite operator, which runs communications and television broadcasting satellites, was valued at €2bn (£1.7bn) as trading ended after having €400m knocked from its market cap.

Oneweb shareholders, including the taxpayer, would be paid in Eutelsat stock under the terms of the takeover, becoming 50:50 shareholders. Oneweb is currently valued at around $3bn (£2.5bn). The taxpayer has an 18pc stake worth around $600m in Oneweb, which represents a $100m profit on its original investment. But a sinking Eutelsat share price threatens to wipe out any profits on the deal.

A source close to the takeover confirmed that if the value of Eutelsat’s business falls it could ultimately undercut the value of the taxpayer’s stake. Sources stressed the final terms of the merger have yet to be finalised.

Oneweb, which the taxpayer rescued in 2020 at the urging of the Prime Minister’s then aide Dominic Cummings, is building a network of hundreds of broadband satellites as part of an effort to rival Elon Musk’s Starlink.

However, launching and operating Oneweb’s constellation has been beset by delays including its own bankruptcy and Russia’s invasion of Ukraine. The Kremlin halted Oneweb’s rocket launches from a Russian-controlled cosmodrome in Kazakhstan.

Eutelsat’s shareholders include the French government, which holds a 20pc stake in the company, and a Chinese sovereign wealth fund. The deal is likely to come under scrutiny because of Eutelsat’s Russian business, which has been accused of fuelling Kremlin propaganda by broadcasting pro-kremlin news channels to 15m households.

The British Government is hoping to retain its “golden share” in Oneweb, which includes giving it a veto over moving the company’s headquarters.

Meanwhile, the Competition and Markets Authority yesterday said it was considering launching an inquiry into the £6bn merger of Inmarsat and Viasat, rivals of Oneweb and two of the largest satellite connectivity firms.