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British satellite champion on brink of takeover by the French

A handout photo made available by the press service of the Russian State Space Corporation ROSCOSMOS - Shutterstock
A handout photo made available by the press service of the Russian State Space Corporation ROSCOSMOS - Shutterstock

A satellite operator bailed out by taxpayers under Boris Johnson is on the brink of being taken over by a French rival listed in Paris in a major blow to Britain’s efforts to compete in the space race.

OneWeb, which was saved from collapse in 2020 with a state bailout at the urging of Mr Johnson’s then-aide Dominic Cummings, is in advanced talks to be acquired by Eutelsat with an announcement expected in coming days.

The deal threatens to leave Britain without a champion in the global scramble to launch communications satellites, with OneWeb intended to operate as a rival for Elon Musk’s company Starlink.

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It would also likely leave British taxpayers with a minority stake in Eutelsat, which broadcasts TV channels in Russia and has been accused of enabling “the Russian war propaganda machine”.

OneWeb executives and UK government officials are this weekend locked in talks with representatives from the French company to thrash out an agreement.

A deal is expected to be unveiled in the coming days after a last-minute wrangling on Friday delayed a scheduled announcement.

The French state holds a 20pc stake in Eutelsat. Another 5pc belongs to China Investment Corp, a Beijing sovereign wealth fund, meaning OneWeb would be partly owned by a strategic rival to the West.

With the paperwork yet to be signed, insiders cautioned that talks could yet break down.

Likely to be billed as a “merger” between the two companies, company insiders said that the deal would be tantamount to a French takeover.

It will leave the Government in a quandary given Eutelsat’s continued dealings in Russia. Eutelsat provides television broadcasting to 15 million Russian households including channels accused by  Reporters Without Borders of being “spearheads of the Russian war propaganda machine”.

If the combined business continues to broadcast in Russia, British taxpayers would be left as a major investor in a company facilitating Kremlin propaganda.

The Government and Indian telecoms company Bharti, owned by billionaire Sunil Mittal, rescued OneWeb after it collapsed in 2020 at the start of the coronavirus pandemic. Taxpayers own a 17pc stake.

Mr Johnson said the strategic investment would “put the UK at the forefront of space tech”. He also hailed the move as a “terrific boost to our advanced manufacturing, services and tech industries”.

Yet this weekend senior company insiders said Britain’s involvement with OneWeb had been little more than a slew of broken promises.

Starlink - Florida Today
Starlink - Florida Today

They told The Telegraph that far from the company working hand in glove with the Whitehall officials, it had largely been left to fend for itself.

A source said: “It is just another case of the Government not knowing a good thing when it has got one.”

Government sources, however, were insisting that this was a positive move that would guarantee the future of the loss-making company while maintaining UK involvement. They said that the UK will retain a golden share in the company, which gives it a veto over moving OneWeb’s headquarters and a first preference for future manufacturing.

Company insiders were unconvinced, saying that they fear Eutelsat would hand lucrative contracts to build future satellites to Airbus’s vast manufacturing plant in Toulouse.

The company, which is developing internet communications satellites to provide rural broadband, is viewed as a potentially crucial defence player because of its plans to deploy a back-up form of GPS and critical for countering the satellite ambitions of Russia and China.

However, OneWeb’s constellation of more than 400 satellites has already cost billions of pounds to build and the UK Government has previously signalled it has no plans to inject more taxpayer cash into the business.

OneWeb’s plans to launch internet connectivity across the UK were dealt a blow earlier this year when Russia invaded Ukraine. In response to UK sanctions, Russia blocked OneWeb’s satellites from launching from a rocket base it controls in Kazakhstan, further delaying the launch of its broadband services.

The merger with Eutelsat would mean the combined company is listed in France, although a source said it could also target a listing on the London Stock Exchange. The deal would value OneWeb at around $3bn (£2.5bn) and the taxpayer’s stake at $600m. Eutelsat’s market cap is around €2.4bn (£2bn).

Insiders fear the French takeover would ultimately lead to operations being shifted to France and waning UK influence. Eutelsat was already the second largest shareholder in OneWeb, controlling around a quarter of the company. One source described the merger as a “French coup”.

Another source close to the deal, however, argued it would join up space, defence and intelligence programmes from the UK, France, India and Japan and create a more powerful rival to Mr Musk’s Starlink satellite company.

Mr Musk’s Starlink has emerged as the dominant force in low earth orbit satellites, which provide broadband connectivity. It has already deployed more than 4,400 satellites. China is also planning to deploy its own satellite network.

The source said: “A single, combined Western alliance with financial clout can properly compete against China in the global satellite race.”

Eutelsat has continued to do business in Russia despite its invasion of Ukraine and has defended this business, which contributes 6pc of its revenues, on the grounds of neutrality. The company provides satellite services to Russia’s NTV and Trikolor, both of which carry news channels broadcasting Russian propaganda about the war.

Last week, the French senate signed off €6bn in funding for Emanuel Macron’s effort to build a vast European satellite constellation in “low earth orbit”.

Taking control of OneWeb would provide the French President with a shortcut to fulfilling his space ambitions.

All parties declined to comment.