Widgetized Section

Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone

OneWeb a threat to established sat-business?

June 25th saw the major announcement from OneWeb to build and launch by 2019 some 650 satellites in order to improve the planet’s connectivity, including broadband and internet services. News emerged that OneWeb had placed the world’s largest-ever orders for satellite launchers (21 from Arianespace and 39 from Virgin Galactic), and had won support from India’s telco giant Bharti, Intelsat and even Coca-Cola.

Intelsat put a modest $25 million into OneWeb’s $500 million initial funding round in order to secure some key business opportunities. This provoked one investment bank to pose the question as to whether Channel Islands-based OneWeb poses a risk to existing satellite operators.

Giles Thorne, an analyst at Jefferies, says – at the moment –  OneWeb does not pose an actionable risk. Nevertheless, the OneWeb scheme does have the scope to be “highly disruptive” and supplying dramatically lower costs-per-bit of data traffic, Thorne says: “the good news was that it either delivers massive price elasticity of demand or doesn’t get off the drawing board in the first place.”

Thorne cautions that Intelsat’s modest investment is a low risk for them and could pay dividends if OneWeb should prove commercially and technologically viable.

Indeed, the Jefferies note reminds investors that OneWeb’s founder Greg Wyler has repeated his earlier comment that his plan is not about displacing or replacing existing satellite operations.

But Jefferies also asks the $3 billion question, as to where is the “hard-nosed” money. Giles Thorne asks where is the bank or other financial cash? “The involvement of a purely financial investor is noticeable by its absence and suggest that a fully-baked business case is still pending. This is a critical consideration. All the current parties at the table have something to gain from the realisation of OneWeb’s ambitions, and even there, we’re yet to see hard commitments: the Airbus announcement was greeted with some scepticism (and backed up by rumours that only small Airbus resources will be put to work on the OneWeb order – the dedicated manufacturing facility has not been green lit). The Arianespace CEO, Stephen Israel, has said that the Soyuz rocket deal is firm and that Arianespace will buy 20 rockets from Roscosmos in September (a development we’ll be watching for closely).”

You must be logged in to post a comment Login