PARIS — Startup satellite broadband constellation startup OneWeb has given up on securing export-credit financing from France’s Bpifrance and will conduct several new rounds of funding from current and prospective equity investors in the coming months to complete its Phase 1 capex plan, OneWeb Chief Financial Officer Tom Whayne said.
Whayne conceded that the universe of investors willing to support OneWeb is not large given the company is building a greenfield infrastructure with no existing customers.
What Whayne did not say, but what has been said by bankers looking at OneWeb for months, is that the company has a risky business plan and a major investor — Softbank of Japan — whose own debt is classed as junk by the major rating agencies and whose role in OneWeb remains unclear.
OneWeb has raised $3.4 billion with the latest $1.25-billion round completed in March. To complete its first-generation network, what OneWeb calls Phase 1, of 650 low-orbiting satellites, the company needs around $5 billion.
Given that OneWeb has partnered with Airbus Defence and Space to build the OneWeb fleet, and with France-based Arianespace to launch the constellation, albeit mainly aboard Russian rockets from Russian territory, OneWeb sought the support of Bpifrance.
Offering broadband to the world’s poorest regions was never going to be an easy sell, and industry officials said the lack of customer commitments made it tougher. OneWeb has since tweaked is business model to go after vertical markets including aeronautical and maritime customers. But these markets already coveted by multiple other satellite operators.
One industry official said OneWeb’s hopes for Bpifrance support were all but abandoned months ago.
Addressing the World Satellite Business Week conference organized by Euroconsult here Sept. 9, Whayne said the search for new equity investors has already begun, as well as preparations to seek more capital from the existing equity owners.
“We are in active discussions with our existing investors as well as some new potential investors for an equity financing. We’ll do one in the next few months. We are also having conversations with a number of third-party debt providers and we’ll do some debt financing in the next few months. And we’ll do a fair amount of equity at some point next year.”
An easier-to-tell story once monthly launches start
Whayne said investor sentiment toward OneWeb should improve as the company starts launching satellites on a regular basis.
Six OneWeb satellites are in orbit and working well, the company has said. Monthly launches of 30-plus satellites each on Russian Soyuz rockets from three Russian spaceports are scheduled to start in December.
Stephane Israel, chief executive of Arianespace, said here Sept. 9 that Arianespace, on the strength of its agreement with Russian entities, was selected because of Russia’s demonstrated capability to launch Soyuz rockets at sustained high levels. OneWeb has contracted for 20 Soyuz launches, each carrying 30 or more 150-kilogram OneWeb broadband satellites.
“When we sit here next year, we will have half our constellation deployed,” Whayne said. “We think that will be very interesting for new equity investors. Export credit finance will not form the bedrock of our phase-one deployment, but it is something we are actively thinking about for our Phase 2 and Phase 3 deployments once we’re fully operational.”
OneWeb founder Greg Wyler has already been talking about what a more-capable next-generation system would look like.
But outlining tomorrow’s architecture does not do much for financing today’s constellation design.
Whayne said educating investors on the OneWeb story has been no easy task. He said the technical and financial due diligence has been “the most exacting I have ever seen.”
The fact that [several original OneWeb investors] stepped forward and continued to support the company in a big way — most having participated in multiple rounds — says a lot,” Whayne said.
“Given where we are in the deployment phase, and how much capital we have raised and how much we have to continue to raise, we cannot go tap many sources. It’s a very unique story — something for equity or debt providers willing to roll up their sleeves and understand the story.
“And like our existing investors, they have to be willing to get behind the fact that we have a decided, multi-year advantage versus anybody else that’s going to be a potential competitor, and have comfort int eh commercial opportunities that we have, and our business plan and our ability to defend it.”
OneWeb’s $1.25-billion equity round, which caused some original investors to write down the value of their stakes in the company, included $500 million from Softbank, $300 million from Grupo Salinas of Mexico, $200 million from Airbus, $98 million from Qualcomm and $27 million from the government of Rwanda.