OneWeb, the Softbank-backed start-up whose mission was to bring the whole world online by connecting remote areas to the internet via a constellation of satellites has become the first high profile tech sector casualty of Covid-19 after it filed for bankruptcy on Friday. The drastic step, which saw all but a skeleton staff lose their jobs, came after a breakdown in talks over fresh funding needed for the company to commercially launch its service.
Discussions had been taking place with Softbank, OneWeb’s lead investor, over a bridging loan to see it through the current freeze in financial markets. The loan, worth up to $2 billion, would have given OneWeb enough time and cash flow to launch commercial operations and attract new investment.
However, Softbank, chastened by its recent experience with WeWork, the co-working space company it was also the largest backer of, was unwilling to agree to terms OneWeb’s board felt it could agree to. Chief executive Adrian Steckel said in a statement:
“Our current situation is a consequence of the economic impact of the Covid-19 crisis. We remain convinced of the social and economic value of our mission to connect everyone everywhere.”
A source close to the discussions told the Financial Times that talks between OneWeb and Softbank broke down the weekend before the bankruptcy announcement last Friday. Hours after the failure of negotiations, OneWeb went ahead with the launch of over 30 micro satellites, which were carried into space from Kazakhstan’s Baikonur Cosmodrome. The satellites are part of a constellation intended to total around 640.
OneWeb’s mission was to beam affordable wireless broadband internet to anywhere in the world, covering remote regions hard to reach by cable as well as ships and planes. That was to be achieved through a constellation of micro satellites orbiting much closer to earth than traditional satellites.
The company has raised a total of $3.4 billion in investment, with backers, other than Softbank, including Airbus, chip-maker Qualcomm and Virgin Group. OneWeb was competing with other internet satellite projects including Amazon’s Project Kuiper and Elon Musk’s SpaceX. A total of $20 billion has been invested in satellite start-ups since 2009, according to data published by Space Angels, a venture capital group focused on the sector.
A few dozen key employees will remain at OneWeb to manage the approximately 70 micro satellites the start-up already has in orbit. That will allow it to retain its spectrum license, which, it will be hoped, could see a new investor bring the operation back from insolvency when economies and financial markets start to return to a level of normality after the Covid-19 crises eases.
Softbank itself has been struggling to manage its share price during the coronavirus-inspired stock market crash. The company is heavily indebted, which saw it become a target of activist investors and short sellers. The Financial Times recently reported that CEO and co-founder Masayoshi Son had explored taking SoftBank private before instead deciding to sell off $41 billion in assets to further fund a share buy-back scheme. Several other large start-ups in the SoftBank portfolio will soon need to secure additional funding if they are to continue operations.
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