UK taxpayers invested £400m in OneWeb. Its technology is now a gift for France.

Pouring £400 million of taxpayers’ cash into a bankrupt satellite company in the middle of a pandemic was something of a head-scratcher for the public. But for Dominic Cummings, spending the money in June 2020 to rescue the British satellites venture OneWeb was a no-brainer.

It was a symbol of the Brexit freedoms that Cummings had campaigned for: freed of the bureaucratic shackles of Brussels, the government could place swashbuckling bets on groundbreaking technology that could rival Elon Musk and his burgeoning Starlink satellite programme.

The UK’s investment in OneWeb, a “constellation” of hundreds of satellites designed to provide internet coverage everywhere on the planet, was treated with scepticism by civil servants from the outset. By the time Cummings was shown the door in November 2020, the taxpayers’ investment was already souring.

When Boris Johnson quit as prime minister in July 2022, the wheels were in motion to sell the operation to the French satellite operator Eutelsat in what was officially billed as a “merger”. When the deal was done, UK taxpayers received a 10.9 per cent stake in Eutelsat as well as a “special share” that would safeguard British interests.

But the deal seems to have proved a dud – for Eutelsat and the British taxpayer.

The Indian telecoms billionaire Sunil Bharti Mittal is a shareholder in Eutelsat, the Paris-based company that bought OneWeb

Eutelsat revealed last week, in a little-noticed stock market announcement, that OneWeb was beset with delays, sending the French company’s shares to an all-time low. That means UK taxpayers have now lost roughly £250 million of the £400 million the government originally sunk into OneWeb.

But Britain’s deal to offload its OneWeb stake to the French is not only looking bad financially. It is now emerging that Eutelsat, whose other shareholders include the Indian telecoms billionaire Sunil Bharti Mittal as well as the French and Chinese governments, may have played a blinder. According to company insiders it appears that the Paris-based company has seized control of the British technology and intellectual property that was painstakingly nurtured within OneWeb’s control centre in Shepherds Bush. Britain’s “special share” designed to safeguard the UK’s interest in OneWeb could be worthless.

Before addressing what went wrong, it is worth recapping how the British satellite trailblazer fell into Eutelsat’s clutches.

Sir Richard Branson was one of a starry cast who were convinced to invest in OneWeb

Founded in 2012 by the entrepreneur Greg Wyler, OneWeb attracted investment from a starry cast. Sir Richard Branson was convinced to invest during a drinks party with Wyler on the British mogul’s Necker Island. Pop star will.i.am became a celebrity endorser after meeting another investor at Davos.

OneWeb also formed a joint venture with Airbus to build satellites at a state-of-the-art facility in Merritt Island, Florida. But when the Covid pandemic hit, halting scheduled launches, losses quickly escalated to a point at which bosses had little option but to file for bankruptcy protection in March 2020.

Cummings saw an opportunity. Johnson’s top adviser at the time convinced the prime minister that state ownership of OneWeb would give post-Brexit Britain a satellite network that would be the envy of the EU – while providing competition to Musk’s burgeoning Starlink programme.

In the summer of 2020, the UK bailed OneWeb out with £400 million alongside millions more from Mittal. But despite the successful launch of hundreds of satellites in the months that followed, the desire to keep bankrolling losses waned within Whitehall.

When the sale to Eutelsat was announced in July 2022 it was hailed as “positive news for UK taxpayers” by the government. Officials insisted that a “special share” would give the UK national security controls over the network and first-preference rights over domestic industrial opportunities.

Yet precisely what the special share entitles the UK to is questionable.

First of all, it is a share in OneWeb’s UK limited company – not in the parent company Eutelsat. Critics said that this matters because, although OneWeb’s technology sits within the UK entity, it is not ring fenced and can be freely used across the Eutelsat group – in other words, potentially without British approval.

As a spokeswoman for Eutelsat said: “The IP [intellectual property] owned by OneWeb (OW) is still legally owned by OW – but OW itself is now owned by Eutelsat, so the IP is within the perimeter of the combined group.”

Eva Berneke, the chief executive of Eutelsat, said that OneWeb would have enough ground control centres in operation to deliver 90 per cent of global internet coverage by the middle of 2024

While OneWeb has successfully launched more than 600 satellites into space, the problems revealed last week are due to problems on the ground.

OneWeb’s network of satellites orbit about 1,200km above the planet and are controlled from the company’s headquarters in west London. Data is beamed down to a network of ground control centres scattered around the world and then transferred on through telecoms infrastructure such as fibre optic cables.

Eutelsat had planned to have all 43 of these ground control centres completed by “early 2024” to deliver what is known as “global coverage”. But last week Eva Berneke, the chief executive of Eutelsat, said that there would now only be enough sites up and running to deliver 90 per cent of global coverage by the middle of 2024.

The stock market was shocked, but it came as little surprise to some in the space industry. “It was very likely,” said Marek Ziebart, a professor of space geodesy at University College London. “They had contracted-out the development of the ground terminals. They didn’t do that in-house.”

Berneke insisted that the delays would not lead to the loss of OneWeb customers to rivals – most notably Elon Musk. Unlike Musk’s Starlink, OneWeb focuses on businesses and industries such as civil engineering and construction using internet-of-things technology rather than everyday consumers. “This is not a melting ice cube,” the chief executive said.

At the same time as announcing the delays to OneWeb, Eutelsat also said that it was selling OneWeb’s stake in its 50:50 satellite-building joint venture with Airbus. Eutelsat said the sale was part of “debt reduction efforts” but some OneWeb advisers fear a different explanation: geopolitics.

OneWeb expects to build a second generation – known as “Gen 2” – of satellites in the future and sources argue that the sale of its American joint venture will pave the way for them to be made in Eutelsat’s home country of France.

Eutelsat responded: “Both French satellite manufacturers [Thales and Airbus] have extensive operations in the UK which are fundamental parts of their supply chain. No decisions have yet been made on suppliers for Gen 2.”

Elon Musk’s satellite company, Starlink, is not considered a competitor as OneWeb focuses on businesses and industries such as civil engineering and construction rather than people

Nevertheless, constructing satellites on the Continent would do no harm to Eutelsat’s chances of achieving its next major goal: winning the contract to deliver the European Commission’s IRIS2 space programme. IRIS2 is the third constellation of the European Union’s strategic space infrastructures after Galileo and Copernicus, for which the EU will contribute €2.4 billion.

Thierry Breton, the European commissioner for the internal market, stressed the importance of IRIS2 when announcing it in November 2022. “Space is indeed a much coveted area in which the European Union must guarantee its essential interests. And our space technologies have become strategic capabilities for our citizens, for the resilience of our economies and, of course, for our armies,” he said.

Eutelsat is expected to leverage the technology it now has from OneWeb to try to win the IRIS2 contract, which is expected to include the development and launch of up to 170 low earth orbit satellites like OneWeb’s between 2025 and 2027, according to the EU space agency.

One industry source this weekend claimed that the OneWeb situation has now attracted the attention of senior British ministers, who have been alerted to the situation and now want to know how the UK was blindsided.

A spokesman for the government responded: “The government’s strategic investment in OneWeb demonstrated its commitment to the space sector and of advancing its ambition to put the UK at the forefront of a new commercial space age. The government’s special share rights in OneWeb are retained in full following the merger with Eutelsat.”

The industry source is unconvinced: “They gifted OneWeb to France.”