Bharti Will Inject $500 Million In OneWeb To Become Its largest Shareholder

Bharti Will Inject $500 Million In OneWeb To Become Its largest ShareholderBharti Airtel's Sunil Mittal has a big stake in OneWeb of UK, which is now venturing into providing Internet from Space.
Snapshot
  • Bharti-backed OneWeb is competing against Elon Musk’s SpaceX and Amazon’s Project Kuiper in the growing broadband-from-space industry.

    The company is now preparing for its eighth launch, which will provide much-anticipated and strategically valuable Arctic region coverage down to 50 degrees latitude on 1 July.

Bharti Global, the overseas arm of Bharti Enterprises, announced on 29 June that it would invest $500 million (Rs 3,714 crore) to become the largest shareholder in the low earth orbit satellite communications company OneWeb, which it rescued from bankruptcy last year with the help of the Government of United Kingdom.

Subject to regulatory approval, the deal is expected to be completed in the second half of 2021.

Bharti-backed OneWeb, which is competing against Elon Musk’s SpaceX and Amazon’s Project Kuiper in the growing broadband-from-space industry, said: "OneWeb has completed its transformation with the exercise of a call option by Bharti to invest an additional $500 million into the company...the call option is expected to be completed in the second half of 2021, subject to regulatory approvals."

The news about the latest investment comes a year after Bharti and the British government offered $1 billion to save the London-based space internet company from bankruptcy. It raises the overall capital to $2.4 billion and increases Bharti's stake to nearly 39 per cent, with the United Kingdom government, Eutelsat of France and SoftBank each holding slightly more than 19 per cent.

The company is now preparing for its eighth launch, which will provide much-anticipated and strategically valuable Arctic region coverage down to 50 degrees latitude on 1 July.

Sunil Bharti Mittal, the executive chair of OneWeb and telecom company Bharti Airtel, said the investment would allay concerns about the group's financing while discussions with other potential investors were still ongoing.

He told Financial Times that this money must be in the pipeline so that the management is not distracted and everyone at the table can relax. Mittal also noted that all the shareholders are aware that the funds are now available.

However, he explained that Bharti’s injection was neither “a necessity nor an obligation... I am doing it before anybody else gets the chance to come in. This is not under pressure.”

As reported, the group is using a call option that was agreed upon during the first bailout. Some sources close to OneWeb said that other existing shareholders may decide to share the investment.

Mittal said that there was a clear commercial opportunity for the satellite communication company. He also stated that the group recently struck a partnership with BT Group to investigate the possibility of providing internet services to rural areas in the United Kingdom and beyond.

However, as reported, OneWeb is said to be in talks with sovereign wealth institutions in the Middle East and Asian corporations as well.

The OneWeb Executive Chairman stated that at a critical juncture in the commercialisation of space, the firm posed a "unique opportunity" for investors. According to Mittal, “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.”

Additionally, he said that governments can serve remote installations, whereas nation-states can accelerate their universal service responsibilities, telcos can speed up their backhaul and enterprise, as well as governments can serve remote installations.

In terms of the latest announcement about the funding, the Government of the United Kingdom welcomed the investment. As per Financial Times, Kwasi Kwarteng, the country’s Secretary of State for Business, Energy and Industrial Strategy, said: “Now that OneWeb has met its original funding objective, I truly believe the company is fast becoming an asset to the British taxpayer and I look forward to seeing their ambition realised to provide global broadband connectivity next year.”

He also stated that the government's financial participation in the company will not only enable the country to deploy low-earth-orbit technologies but will also position the United Kingdom at the forefront of the satellite market, which is expected to grow quickly in the coming years.

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