US security inquiry into French Oneweb takeover

THE sale of taxpayer-backed Oneweb to French satellite champion Eutelsat is facing a national security investigation in a fresh setback for the deal.

The merger is being reviewed by a US Department of Justice committee known as “Team Telecom”, which scrutinises foreign telecommunications investment in America.

Oneweb, rescued from bankruptcy by the British taxpayer, owns a US business that provides secure communications services to the government.

In a letter to the Federal Communications Commission, the US justice department said it was “reviewing” the deal for “any national security and law enforcement concerns”.

The takeover has also been referred to the White House security body, the committee on foreign investment.

An enhanced national security process for telecoms deals was brought in by former president Donald Trump amid concerns about overseas interference in US cable and broadband networks. Deals with more than 10pc foreign investment can be investigated.

Last week, the US committee recommended blocking a proposed submarine cable from Cuba to the US amid concerns that intelligence operatives in Havana could tap them.

The committee has 120 days to complete its inquiries, creating the possibility of delays to the deal. Eutelsat said last month the merger could take longer to complete than planned and may not close until the second half of 2023.

Eutelsat, part-owned by the French state, is due to merge with Oneweb in a deal which values the business at £3bn. Among Eutelsat’s minority shareholders is a Chinese state-backed company.

The Paris-listed company already owns a sizable stake in Oneweb, along with the British Government and India’s Bharti. The deal is aimed at giving the two companies the scale and funding to compete against rivals such as Elon Musk’s Starlink network. Oneweb is in the process of launching a constellation of more than 600 communications satellites.

Eutelsat, which operates TV broadcast satellites, is facing pressure in Europe over its decision to continue carrying Russian pay-tv channels.