OneWeb: Dominic Cummings and £ 400M Public Rescue Package to Rescue a Vulnerable Satellite Internet Company | Political News
This Thursday, three dozen satellites will be launched into space from a launch station in a deserted corner of eastern Russia less than a hundred miles from the north China border.
They are each slightly larger than a refrigerator and attached to a Russian rocket that carries 750 miles into what is known as near-earth orbit.
Here they stay at an altitude 30 times closer than that of more traditional communications satellites, in a zone previously reserved for the international space stations and the Hubble telescope, and, if all goes well, provide timely internet connectivity to every corner of the globe.
They’re a marvel of innovation and technology, but what is even more remarkable is the fact that they are yours.
The company behind the start will be financed and owned by the UK taxpayer Boris Johnson authorized £ 400 million spending to rescue this unknown company that was in bankruptcy in the US at the height of the pandemic.
Sky News has for the first time compiled the full story of the acquisition, starting a year ago when the company was in jeopardy, and opening doors to the top politicians in Whitehall, which opened with remarkable speed despite grave doubts from officials.
Early last year, a little-known company called OneWeb filed for Chapter 11 bankruptcy in a New York court and halted expansion after losing a major financier.
But today, OneWeb is back to launch satellites into space every few weeks – after Dominic Cummings, the former senior advisor to the Prime Minister who saved OneWeb through Whitehall, caught the deal.
However, investing in the UK alone did not offer OneWeb enough money.
So the Prime Minister helped play matchmaker no less and partnered with an Indian telecom billionaire who, against the formal recommendation of Whitehall officials, ran a British rescue, which meant they could run a rescue together.
In exchange for the £ 400million in the UK, the taxpayer now owns a 33% stake in the company, meaning everyone in the UK is now involved in the latest stage in the global space race – to get near-Earth orbit, a piece of space master that is coveted by both billionaires and governments.
The company is unparalleled.
OneWeb’s mission is to use its low-orbit satellite network to provide Internet connectivity to businesses and governments in every part of the world from Alaska to Afghanistan.
This includes groundbreaking technology that is not yet commercially available, and there are no working terminals to monitor operation in practice.
Despite the huge amounts secured by UK taxpayers, the company still does not have enough cash to do the job.
OneWeb says it has yet to find $ 1 billion (£ 720 million) to get the rest of its satellites into space, but it promises none of that will come from the UK government.
And the entire company faces stiff competition from one of the richest men in the world – Elon Musk is in direct competition with OneWeb as its SpaceX program also aims to deliver global internet connectivity directly to consumers from its satellites in near-earth orbit.
There is no indication that OneWeb did anything wrong.
Indeed, OneWeb appeared to have done an incredible commercial feat – emerging from bankruptcy after the UK government, the blue-chip group of investors with the global diplomatic clout that a government investment brings, also sold $ 1 billion. Dollars in funding were received from the deep pockets of the communications company Bharti Global, which is run by one of India’s richest men, Sunil Bharti Mittal.
How OneWeb caught government attention
Chris McLaughlin, head of government relations at OneWeb, told Sky News that the path from bankrupt challenger satellite company to partially nationalized company began almost exactly a year ago when one of its funders – who was suddenly overexposed due to the pandemic – withdrew.
This meant the company had to go into Chapter 11 bankruptcy proceedings.
As a result, the company called the UK government last March to ask if OneWeb could join one of its new businesses Coronavirus Loan programs.
They knocked on doors all over Whitehall, trying first the Department of Digital, Culture, Media and Sports, then the UK Space Agency, and finally the Treasury, which hadn’t yet determined how the loan programs would work at the time they did it.
Dominic Cummings intervenes
They “knocked on the door” of many different parts of Whitehall.
The company argued it was too good an opportunity to pass on.
Mr McLaughlin told Sky News, “We said we had a global asset that would put the UK on the map and give you the connectivity you need for the future. Will you wake up one morning to find it is from the US? and Canada was bought, China or EU? “
However, he said a man in the heart of government – Dominic Cummings, then the prime minister’s senior advisor – was instrumental in getting the company heard.
He said, “We reached out to a number of departments in the UK government – and it wasn’t until we briefly caught our eye on Dominic Cummings, who was looking for ways to emulate darpa (US science and innovation program) and was able to begin to do that.” Think how tomorrow’s technology could come into play, we have a hearing.
“He disappeared very quickly, and then we took care of the treasury.”
When asked how OneWeb contacted Mr. Cummings directly, Mr. McLoughlin simply replied that the company had written “many letters” to different parts of the government.
A source added that OneWeb representatives did not meet Mr. Cummings in person but instead exchanged texts and emails with him, saying there was communication through “return channels”.
They stressed that Mr Cummings was only involved for a short time, although they believe his intervention – which was at the height of his power in number 10 – was vital to the investment, not least because of the hostility elsewhere in Whitehall.
After the prime minister’s advisor suggested that it should go ahead, McLoughlin said the responsibility for the detailed negotiations rests with the Treasury Department rather than with the business department, which formally always had ministerial responsibility for the project.
Chancellor Rishi Sunak The government personally approved the investment despite doubts about the Treasury Department, according to government documents.
Boris Johnson’s secret meeting
However, the £ 400 million in Britain was not enough.
To make the satellite company viable again, it needed more cash than taxpayers alone could provide.
Here Mr. Johnson got involved.
Mr Johnson’s advisors identified Sunil Bharti Mittal, who had been involved with OneWeb from the start but later withdrew, and invited him to a meeting at number 10 in June 2020.
Mr Mittal – the founder of Bharti Enterprises and the tycoon behind Airtel – had expected to meet a “couple of young explorers” on Downing Street, “but instead got Boris to take him to the garden,” a source told Sky news.
The source close to the deal continued, “The meeting was an approach from Boris Johnson who said we were ready for it. What about you if you stepped in as a (co-investor)?”
“(UK Government) said, ‘We really want this as an asset, but we are not a telecom operator and this is a whole new area for the UK Government to get involved in.’ You haven’t done it since Rolls Royce. “
Accordingly, Mr. Johnson suggested that Mr. Sunil partner on the investment.
The source continued, “And Sunil said I’ll come in when you are obliged or not? ‘ It was a one-on-one conversation between the two men and Boris said, “We are engaged” and Sunil said, “Well, we are too.”
The deal was closed days later, according to public records.
The disclosure of that June meeting, at which Mr Johnson allegedly encouraged one of India’s richest men to put money into a tech company, was not recorded in the number 10 quarterly transparency data listing his meetings with outside companies and interests.
The meeting also took place in the midst of economically sensitive negotiations between the government and stakeholders over the price taxpayers could pay for OneWeb, which were not resolved until the following month.
Number 10 told Sky News that Mr Mittal was invited to Downing Street by Number 10 officials, not the Prime Minister, but confirmed that he had met Mr Johnson.
They stressed that it was a brief and informal meeting, claiming that nothing substantial had been discussed and was therefore not recorded in the official minutes.
However, an interview with Mr Mittal on the Sunday Telegraph in November also suggests that the prime minister and the tycoon had a crucial conversation about the deal.
The interview said that when Mittal “met Boris Johnson on Downing Street in June to discuss a secret joint venture to launch Britain into the space race, the deal was taking shape at rocket speed.”
Public service objects
Despite the political and ministerial enthusiasm for the deal, officials at Whitehall were doubtful about the investment and considered it too risky.
On June 26, days after Mr. Johnson met Mr. Mittal, Sam Beckett, the acting permanent secretary of the Department of the Economy, issued a formal warning known as a “ministerial order”.
She said that proper due diligence had not been done on the deal and “it was difficult to be confident at this point” that the project would generate the money promised, and warned that in some scenarios everyone was investing £ 400 million could get lost.
Mrs. Beckett was overruled by the then business secretary Alok Sharma.
Three weeks later, an alternate permanent successor was appointed chief mandarin in the business department, although there is no evidence of a link between the two decisions.
According to OneWeb, it took Whitehall some time to understand the value of the company in what Mr McLoughlin calls a “bargain” as the original shareholders who invested £ 3 billion in the company were wiped out in bankruptcy last year.
He said some stakeholders – including large incumbents – are opposed to the OneWeb deal because they wanted to build a UK replacement for the EU Galileo project from scratch, which the UK may no longer have access to after Brexit.
Do we need it
Why the UK government had to invest in a satellite internet provider in the first place puzzles some MEPs.
Darren Jones, Labor Chair of the Business Select Committee, asks that question.
He told Sky News: “The OneWeb satellite network is designed for internet access, the satellites are very close to the earth and provide access to the internet, but here in the UK we pretty much have internet access, there are areas where We can improve it, but there was never a suggestion that we’d buy a commercial satellite company to do that and so I’m a little wrong about why we spent £ 400 million on it. “
The company suggests that it is a once-in-a-lifetime opportunity to secure parts control of a vital chunk of future space infrastructure, and that buying the UK helped keep the Chinese out of their hands.
Meanwhile, analysts are suggesting that OneWeb’s competitor may have stolen a march.
Marek Ziebart, professor of space geodesy at UCL, told Sky News: “You are not the only one doing this, you have a direct competitor in Elon Musk’s company SpaceX.
“And if we look at this as a race to put the service in orbit, develop and deploy this technology, SpaceX wins this race, SpaceX has a thousand satellites in orbit, OneWeb has 100 – SpaceX has working internet terminals, from They can make broadband connections to their satellites that are working now. OneWeb isn’t here yet. “
On Friday, advisors from the Department of Digital Culture Media and Sports announced that SpaceX could play a role in the broadband rollout of the Gigabit project alongside OneWeb, which is owned by the government.
They may have to take advantage of the competition.
It will be a few months, maybe even years, before we see the future of OneWeb.
The company has 110 satellites in the sky and will have 146 by Thursday, with seven of the eight earth stations “in different states” around the world.
The first terminals should work in May and the remaining satellites should be in the skies by June, the company hopes, and it should test some beta services by the end of 2021 and roll out services next year.
Only then will Downing Street know if its investment is paying off and if the Prime Minister’s gamble in space was the right one.
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