OneWeb Secures $300m Funding for Broadband Services Boost

In space everyone can hear satellite communications firm OneWeb scream in delight for its low Earth orbit aspirations.

Starlink has some competition as satellite communications firm OneWeb secured $300 million (£216.7 million) in funding earlier this month to provide a powerful push to its ambitions in the realm of broadband services.

The equity investment was courtesy of South Korean technology and manufacturing company Hanwha. This investment brings OneWeb’s total equity investment since November 2020 to $2.7 billion (£1.95 billion) with no debt issuance. The investment in OneWeb is expected to be completed in the first half of 2022, subject to regulatory approvals.

It’s certainly a reversal of fortune for London-based OneWeb. Last year it was rescued from bankruptcy by the UK government and Indian telecom company Bharti Global via a joint $1 billion (£722.4 million) bid.

Neil Masterson, Chief Executive at OneWeb, says: “Hanwha brings advanced defence and antenna technology development to the OneWeb line-up.”

It also gets some useful relationships to new government customers and expanded geographical reach.

Youn Chul Kim, President, CEO and Director at Hanwha Systems, notes that OneWeb has “strength in the LEO [low Earth orbit] communication area, the core of space business”.

On the national level, UK Business Secretary Kwasi Kwarteng states that the deal will “put our country at the forefront of the small satellite market, which is set to rapidly expand over the years ahead”.

A politician may actually be truthful for once as according to Morgan Stanley the commercial space market could expand from about $350 billion (£252.8 billion) in 2016 to $1 trillion (£722.4 billion) by 2040. They’re both a long way off – space and $1 trillion – but they are juicy targets to aim at.

OneWeb is aiming for a fleet of 648 satellites to deliver global coverage in 2022 – and it is “fully funded” for this goal. To date, the company has launched 254 satellites into orbit, with another launch planned this month from Baikonur, Kazakhstan.

It has been busy of late. At the start of July it launched another 36 satellites to mark the completion of its ‘Five to 50’ mission. That made OneWeb ready to deliver connectivity across the UK, Canada, Alaska, Northern Europe, Greenland and the Arctic Region. The company said at the time that its network will be ready to offer connectivity services from 50th parallel and above by the end of this year.

It is worth looking at the international names involved in the UK enterprise. While Eutelsat, the French satellite operator, is technically a rival to OneWeb, it  invested $550 million (£397.3 million) earlier this year for a stake of around 20%. Bharti is investing a total of $1 billion (£722.4 million) to get a 35% stake in OneWeb. Coming in next is the UK government, which invested $500 million (£351.2 million) in the bailout, with a stake of just under 20%. Hanwha will take an 8.8% stake as part of this latest investment.

Elon Musk’s SpaceX and Starlink

There are other rivals for OneWeb – such as SES, Viasat, Blue Origin and SpaceX. The latter – run by the ubiquitous Elon Musk – operates Starlink.

Starlink is well ahead of OneWeb with 1,500 satellites launched. Starlink’s website points out that it is now delivering an initial beta service both domestically and internationally, and will continue expansion to “near global coverage of the populated world” in 2021. During beta, it says users can expect to see data speeds vary from 50Mb/s to 150Mb/s and latency from 20ms to 40ms in most locations over the next several months as it seeks improvements of the Starlink system. There will also be brief periods of no connectivity at all.

Starlink also explains how its LEO satellites are over 60 times closer to Earth than traditional satellites, resulting in “lower latency and the ability to support services typically not possible with traditional satellite internet”.

Earlier this month Starlink was given a licence to build a ground station on the Isle of Man. It already has two others in the UK, namely in Cornwall and Buckinghamshire.

On 23 July, Musk announced on Twitter than Starlink has shipped 100,000 terminals for its broadband internet system.

Large LEO Satellite Constellations

Last year, management consulting firm McKinsey discussed large LEO satellite constellations in an article. It proves how events can quickly change.

The article notes that those with ambitions for the large LEO concepts may recall the 1990s, when several companies tried to provide global connectivity.

McKinsey explains: “Globalstar, Iridium, Odyssey and Teledesic had impressive plans. In the end, however, all but Iridium scaled back or cancelled their intended constellations because of high costs and limited demand. All suffered financial problems. After that experience, many industry analysts and investors remain skeptical about the viability of large LEO constellations. The recent failures of LeoSat and OneWeb reinforce that impression.”

It adds that “much has changed over the past 20 years”. To keep it concise, McKinsey reckons satellite technology has advanced, demand for bandwidth has grown and companies have wised up to make profits from connectivity.

The news that OneWeb is back in the game is also a sign of change – and let’s face, it’s no longer a “failure”.

Antony Peyton
Antony Peyton is the Editor of eWeek UK and has 17 years' journalism and writing experience. His career has taken him to China, Japan and the UK - covering tech, fintech and business. Follow on Twitter @TonyFintech.

Popular Articles