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    The UK faces an awkward choice over its golden share in OneWeb

    The UK went against advice from senior civil servants when it rescued satellite broadband pioneer OneWeb from bankruptcy in 2020, investing $500mn alongside Indian telecom magnate Sunil Bharti Mittal.

    It argued at the time that the move was strategic; it gave the UK a platform in the hotly contested region of low earth orbit (LEO) and valuable national security rights over how OneWeb could be used.

    Even though the government has changed, it is still under pressure to show that the investment has been a success, say officials. The proposed combination with Eutelsat, part-owned by the French state, relieved the UK of responsibility for helping to fund OneWeb’s second generation satellites.

    But now the question is whether the ultimate price of success will be to require that the UK adjusts its golden share in OneWeb — one of only three companies operating high speed communication services from LEO. This could dilute Britain’s options for using OneWeb as a strategic global asset.

    Last week in Paris, the chief executives of Eutelsat and OneWeb appeared to suggest that some adaptation would be necessary for the company to compete in one of the biggest space tenders around: the EU’s proposed €6bn satellite broadband constellation. Officials in Brussels remain deeply hostile to OneWeb, saying the UK’s golden share means the EU cannot have sovereign control over the service. The golden share gives the UK “a range of national security rights, including use of the OneWeb network for national security purposes”.

    In an interview at the annual World Satellite Business Week, Eva Berneke, chief executive of Eutelsat, told me that the government “wants the customers just as much as the rest of the shareholders”. It was up to “the UK government to accept that those rights are being kind of waived on certain customers, because that’s the only way for those customers to be part of OneWeb”. 

    Neil Masterson, chief of OneWeb, said it would be possible to organise a “proxy structure” that would meet the EU’s sovereignty requirement. “That enables us to do business with the Department of Defence . . . There’s no reason why that model cannot be translated to Europe or to any other country,” he said.

    Maybe. I doubt that Thierry Breton — EU commissioner for the single market and the main opponent to using OneWeb for Europe’s satellite project — would agree to any such tinkering around the edges. But even a proxy structure could still require the government to reinterpret its golden share.

    Any decision to make an adjustment should be based on a sound understanding of what the government wants to get out of its investment. Does it see OneWeb as a strategic asset that could provide capability useful to strategic partners and allies? Should it be the platform for the UK space industry to develop leading technologies and applications? Or does it simply want to distance itself from the venture with minimum embarrassment and hopefully a bit of profit?

    “There is a spectrum of opinion [in government] over whether this should be considered as a strategic asset or an investment,” said one official. “The golden share buys you strategic capability. It is not an easy decision.” 

    Nor should it be. OneWeb has valuable assets — such as global priority rights over the spectrum it operates in. It is also one of the few operators already delivering connectivity. But OneWeb still requires significant investment to realise its potential.

    Meanwhile, Elon Musk continues to race ahead with his Starlink constellation. As well as serving ordinary consumers, Starlink is fast moving into the realms of government and business services — exactly the segment targeted by OneWeb.

    A study last month by satellite expert Tim Farrar concluded that any new constellation would struggle to compete on a commercial basis. Vast numbers of satellites would be required to provide adequate coverage and, just as importantly, to help drive down the costs of customer terminals. That means the costs of development would be prohibitive. For OneWeb, he concluded, the EU contract could be vital.

    For Brussels, too, OneWeb offers advantages. After all, it already has operational satellites and spectrum, which could save the EU billions.

    But given Starlink’s rapid expansion, the UK government has little time to decide what it wants from its OneWeb investment. Commercial success under Eutelsat is likely to mean surrendering some control. That will limit OneWeb’s potential as a strategic UK asset. The longer the new government takes to come to a conclusion, the more difficult it will be to prove the investment has been a success.

    peggy.hollinger@ft.com

    The UK faces an awkward choice over its golden share in OneWeb Republished from Source https://www.ft.com/content/d13d65af-69d3-4468-881d-5082f926c7b5 via https://www.ft.com/companies/technology?format=rss

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