Eutelsat & OneWeb Merger Faces Conflict of Interest Issues

4th Aug 2022
Eutelsat & OneWeb Merger Faces Conflict of Interest Issues

UK Business Secretary Kwasi Kwarteng is currently being probed over a conflict of interest with the OneWeb and Eutelsat merger. The deal, reported to be worth $3.4 billion, would see the two companies join forces to directly rival Elon Musk’s SpaceX.

Mergers of this type are scrutinised under the National Security and Investment Act 2021 in the UK. And as UK Business Secretary, this makes Kwarteng responsible for approving the deal. The problem is that he is also the minister in charge of the UK Government’s current investment in OneWeb.

Darren Jones, Chair of Parliament’s committee for Business Energy and Industrial Strategy , recently wrote to Kwarteng to outline the conflict that he faces. Kwarteng has until 12th August to explain how the issue will be resolved.

OneWeb and UK Government Connection

OneWeb made its way into the race for providing satellite services 10 years ago. Thanks to heavy investment from the likes of SoftBank, Virgin and Coca-Cola, the London-based company took to the skies and eventually saw its first satellites enter low-Earth orbit (LEO) 9 years later.

SoftBank was already in the hole to the tune of $1 billion in 2020 and decided not to further its investment that was set to increase to $2 billion. The economic downturn due to the Coronavirus pandemic was cited as the reason. OneWeb failed to find further significant investment at that time and filed for bankruptcy. However, the firm was saved at the 11th hour by a $500 million injection from the UK Government and $550 million from French satellite operator Eutelsat.

The Result of Approving the Merger

Eutelsat, which has 36 GEO geostationary orbit satellites in operation, has agreed to increase its investment in OneWeb which has 428 LEO devices in place. And this would certainly create a major European player in the niche. But the new company becomes a player that still falls light years short of its major competitor SpaceX. Elon Musk’s company already has over 2,500 satellites currently in orbit. Amazon’s Kuiper project has also been busy reserving launches for its own inventory that will see over 3,000 satellites take off over the next few years. The race to provide the next generation of high-speed broadband and other communications services is definitely starting to heat up.

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