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UK expected to have OneWeb ‘golden share’

July 10, 2020

By Chris Forrester

The joint bid for OneWeb’s assets by the UK government and India telco giant Bharti should get outline approval from the New York Southern District Bankruptcy Court today, July 10th.  There are still a few formal logistical steps to be negotiated and the purchase is not likely to be totally signed off until November 27th (assuming no regulatory delays).

A report from Quilty Analytics says that they believe the UK government has certain overall control rights (a ‘golden share’) over and above the implied 50/50 share of the capital commitment.

OneWeb’s former equity holders and its unsecured creditors are expected to be wiped out, suggests Quilty. “Counting their cash proceeds and the notional value of their equity received, we estimate that the all-in recovery for OneWeb’s secured creditors is roughly ~15 per cent. While not a great recovery, it still a better outcome than past LEO bankruptcies. In fact, as shown below, the $250 million in value payable to existing OneWeb stakeholders is almost an order-of-magnitude better outcome than certain other “1st Gen” LEO bankruptcies,” says Quilty.

Quilty lists the assorted satellite bankruptcies of the past, including Iridium (1999 $5 billion), Orbcomm (2000 $0.8 billion), Globalstar (2002 $4.3 billion) and now OneWeb $3.4 billion.

The analysts suggest that the overall impact for SpaceX, for example, is “marginally negative” and OneWeb’s rescue prevents SpaceX from inheriting OneWeb’s priority filings in Ku-band.  The rescue could also be a problem in that the UK is now a LEO competitor while also being the regulator of OneWeb (via OFCOM).

Quilty suggests that as for Telesat the OneWeb purchase is overall negative and say that they do not believe that Telesat was a serious bidder for OneWeb. “Funding Telesat’s LEO fleet could be more challenging due to the perception of increased competition. Ongoing uncertainty regarding OneWeb’s intentions could further-stall an already delayed program and Telesat’s ability to begin offering services in 2022,” says Quilty.

OneWeb’s hurdles are not just legal. Quilty estimates that OneWeb is obliged to orbit 360 satellites by June 2023 and this could need some $800 million in fresh funding and just over twice that amount to complete its 1st Generation satellites.

OneWeb’s Generation 2 craft – and potentially including the UK’s demands for a GPS system – also needs to be planned and developed. Quilty rightly says that with most of the OneWeb staff laid off (and including the OneWeb/Airbus factory staff) it is going to take time to rebuild that team. Quilty questions whether the rebuilding should take place in the US or UK or a combination of the two.

Quilty pulls no punches with regards to OneWeb’s potential competition. SpaceX has to be recognised as a valid competitor, as is Telesat. But not to be ignored is the might of Amazon and its Project Kuiper. “And now entering the ring, a duo that teams a great-power government with the globe’s #2 mobile operator by subscribers.”

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