A UK Government consortium has won the right to acquire bankrupt OneWeb and fund the completion of its first mega-constellation.
A consortium of Her Majesty’s Government (HMG) and Bharti Global Limited has won the right to acquire failed satellite broadband provider OneWeb with a $1 billion bid. The acquisition is expected to be completed by the fourth quarter of 2020 following approval of the purchase from OneWeb’s creditors, Bankruptcy Court, and regulators.
The $1 billion bid will be funded equally by each member of the consortium with each putting forward $500 million. The amount will reportedly buy the pair a “significant equity share in OneWeb.”
According to a July 3 UK Gov press release, the deal proclaims the country’s ambition to be “a pioneer in the research, development, manufacturing, and exploitation of novel satellite technologies.”
Once the purchase is concluded, the consortium will seek to resume OneWeb operations as soon as possible.
OneWeb currently has FCC approval for a constellation of 650 small satellites. Once launched, the constellation would likely be able to provide limited coverage to specific locations around the world. The global high-speed, low latency connectivity the company has promised will however require a much larger constellation.
In preparation for this requirement, OneWeb has already submitted an application to the FCC to increase the size of its constellation to 48,000 satellites.
The July 3 press release hints that the $1 billion deal will enable OneWeb to complete the “construction of a global satellite constellation that will provide enhanced broadband.” However, this appears to be misleading.
If the consortium intends to complete the full 48,000-satellite constellation, $1 billion won’t even scratch the surface of the cost required. Currently, each satellite costs approximately $1 million to produce. As a result, just the cost of the satellites alone would be $48 billion.
The price tag of the satellites will of course be significantly lower due to the economy of scale one could achieve producing such a large number of a single product. However, even if you generously predicted the satellites would cost $1 billion to produce, you would still need to launch the titanic constellation on hundreds of rockets. Unlike SpaceX, OneWeb does not have its own launch vehicle to utilize for this task and as a result, launch costs would very easily double the cost of the OneWeb constellation, again using the most generous economies of scale.
The question, as a result then becomes, can the consortium fund the titanic project to completion?
Bharti Global Limited is a titan in the telecommunications industry with over $10 billion in annual revenue. As a result, over a period of 10 years, the telecom giant could pull its own weight. However, the government of the United Kingdom has earmarked approximately $500 million a year at its peak to fund the country’s space agency. If the government utilizes the full amount for the project over an extended period with taxpayers and multiple different Prime Ministers approving of the project, it might be possible. Probable though? Unlikely.