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OneWeb bankruptcy opens door for competitors or new investor

OneWeb bankruptcy opens door for competitors or new investor
A crowd of executives, media and VIPs gathers for the opening of OneWeb Satellites' manufacturing facility in Florida in July 2019, but the fate of the plant is uncertain after the bankruptcy of its parent company, OneWeb. File Photo by Paul Brinkmann/UPI

ORLANDO, Fla., March 31 (UPI) -- The bankruptcy filing for satellite network company OneWeb opens up the possibility that competitors like SpaceX or Amazon could step in to buy its assets, industry experts said.

OneWeb is one of many companies pursuing faster, global Internet service. The bankruptcy of a major player like OneWeb, which the company attributed to the coronavirus pandemic, could lead to consolidation that bolsters competitors.

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The company has 74 satellites in orbit, with a goal for over 600. By contrast, SpaceX has 363 satellites in orbit for its high-speed network, Starlink, and has plans for up to 42,000. Amazon founder Jeff Bezos, who owns Blue Origin space launch company, hasn't revealed many details of his proposed satellite network.

"I can't say it would be too surprising if Bezos comes in and buys the production line, satellites ... at very low prices and recycles it all into a new constellation," said Shagun Sachdeva, a satellite industry analyst with Northern Sky Research.

RELATED OneWeb files Chapter 11 bankruptcy

Sachdeva noted ties between Blue Origin and OneWeb, including a previously announced contract for OneWeb to launch with Blue Origin. Bezos' company built a rocket factory complex just down the road from OneWeb Satellites' factory near Kennedy Space Center in Florida, which would make it easy for Blue Origin to operate at the satellite factory.

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OneWeb Satellites, a subsidiary of OneWeb, said Monday it was slashing its workforce by half at the Florida manufacturing factory amid supply chain disruptions due to the coronavirus pandemic and the bankruptcy filing Friday.

No surprise

RELATED OneWeb launches 34 satellites from Kazakhstan

"OneWeb's bankruptcy, while quite disappointing, is not a big surprise. Their business model was quite challenging," Sachdeva said. "I believe things went wrong for OneWeb due to underestimating the costs involved in getting a constellation this big up and running."

OneWeb Satellites is jointly owned with France-based Airbus.

"Airbus is the much larger parent in the joint venture, so they will have a lot to say about the final outcome of any bankruptcy sales," said Dale Ketcham, vice president of government and external relations with Space Florida, a state agency that arranged the lease of OneWeb Satellites' factory site.

RELATED SpaceX plans Sunday launch from Florida to boost Starlink satellite count

"It's a great facility no matter who's using it, but we hope it stays OneWeb Satellites," Ketchum said.

The plant opened in July 2019 with a plan to employ 250 people by the start of this year. The company did not say how many people were laid off.

Since aerospace has a limited number of big customers, consolidation often occurs after a company goes bankrupt, said Joel Sercel, and engineer and founder of space startup TransAstra, which develops lunar and asteroid mining technology.

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Interest in assets

"In the history of space companies, generally speaking, when a company files for bankruptcy, other space companies will be interested in their assets," Sercel said. "It's quite obvious that SpaceX and Amazon are candidates. The aerospace industry is full of strange bedfellows."

He noted, though, that many companies have tried to launch large satellite constellations before, including Motorola's Iridium, which became operational in 1998 but filed for bankruptcy a year later.

"The real question is, will someone come up with a business model that makes sense for a satellite network like this -- to get the revenue," Sercel said.

SpaceX, Blue Origin and Amazon did not respond to requests for comment.

OneWeb owes its biggest business creditor, launch provider Arianespace, based in France, over $238 million.

OneWeb reported assets of $3.3 billion, the most significant of which are radio-frequency licenses and licenses to receive signals in nations around the globe, while its debts and liabilities are $2.1 billion, according to the bankruptcy petition to the court.

Despite the positive balance sheet, the company said financial market fallout from the coronavirus pandemic had interrupted efforts to raise more cash for expansion of the satellite network. As a startup, the company had no significant revenue.

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"While the company was close to obtaining financing, the process did not progress because of the financial impact and market turbulence related to the spread of COVID-19," the statement said.

OneWeb had received billions in investments, chiefly from Japan-based SoftBank, and was in the process of seeking more, according to a statement by OneWeb.

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