Airtel Bets Heavy On Satellite Internet: Pumps In Rs 3600 Cr, Gains Controlling Stake In OneWeb
Bharti Group will invest $500 million in satellite internet company, OneWeb.
With this investment, Bharti Group (BG) will become the largest shareholder in OneWeb, a firm that was rescued from bankruptcy by the Group and the British govt.
Rescue From Bankruptcy
In 2020, BG along with the UK govt won an auction and acquired OneWeb which was in a financially precarious state due to funding pulled by its biggest investor SoftBank.
Both partners pledged to commit $1 billion in order to acquire OneWeb and to finance the restarting of operations.
The firm ultimately aims to provide broadband connectivity throughout the world by next year.
UK Govt Reaction
Kwasi Kwarteng, MP in the British parliament, said that his govt’s involvement will allow the UK to not only deploy LEO technology but will also give it a headstart in the burgeoning small satellite market.
He also expressed that the fresh funding reflects confidence of a bright future for the company and could become an asset to the British taxpayer.
Company Returns To Normalcy
Shravin Mittal, MD at BG, said that with this round of financing, the company’s funding requirements have been fulfilled.
He also said that they managed to undergo transformation by resuming full-scale operations in just a year and that too during a global pandemic.
The transaction came about when BG exercised its call option.
BG stated, “OneWeb has completed its transformation with the exercise of a call option by Bharti under existing shareholders’ agreement to invest an additional $500 m into the company.”
After the transaction is completed, BG will end up owning 38.6% of OneWeb.
An investment of $550 million from Eutelsat Communications was also completed last year.
Eutelsat Communications is the world’s 3rd largest global satellite operator with coverage spanning all of Europe, the Middle East, Africa, Asia and the Americas.
Other stakeholders include the British govt, Eutelsat and SoftBank with each owning 19.3%.
The transaction will conclude by the second half of the year, depending on regulatory approval.
Upon completion, OneWeb will have procured $2.4 billion of equity investment without debt issuance.
Upcoming Launch And Future Plans
The announcement comes in time for OneWeb’s 8th launch on July 1 in which it will deliver coverage to the strategically valuable Arctic, something which is highly anticipated.
Neil Masterson, CEO of OneWeb, says that 10 more launches will enable them to “deliver global coverage and connectivity.”
He also said that one of the USPs of OneWeb is that it has a “significantly lower entry cost of any LEO”, making it a “three-times lower cost Constellation.”
OneWeb’s Executive Chairman Sunil Bharti Mittal, said that the company presents a “unique opportunity” for stakeholders as the race to provide satellite internet and commercialisation of space throughout the world gains speed.
Mittal further said, “With its Global ITU LEO Spectrum priority, telco partnerships, successful launch momentum and reliable satellites, OneWeb is ready to serve the vital needs of high-speed broadband connectivity for those who have been left behind.
Nation-states can accelerate their universal service obligations; telcos their backhaul and enterprise; and governments can serve remote installations.”