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The taxpayer has been hit by a £300m paper loss from a state bailout of satellite business Eutelsat OneWeb after its parent company’s shares sank to a record low.
The British stake in OneWeb is worth a quarter of the £400m originally injected in a rescue deal orchestrated by Boris Johnson’s government in 2020.
The collapse means the UK’s investment is worth €133m (£110m), representing a near £300m paper loss for the taxpayer.
The British satellite business was bought out of bankruptcy by the UK government and later merged with Paris-listed space business Eutelsat in 2023 in an attempt to create a European rival to Elon Musk’s Starlink.
However, while the all-share deal implied a value of €12 per share, Eutelsat’s stock has since imploded. In the past 12 months, it has halved and is trading at record lows of €2.58.
Founded in 2012, OneWeb has launched a network of 650 satellites aimed at providing global internet signals from space. Mr Musk began work on Starlink years later but his company has worldwide coverage with more than 6,700 satellites in orbit.
The merger with Eutelsat, a nearly 50-year-old satellite communications and TV broadcast business, was aimed at creating a larger rival with access to capital and debt markets that could take on Mr Musk.
It was also borne out of necessity, as the British government and OneWeb’s other major shareholders had gone cold on injecting billions more into the business they rescued.
The unusual merger left a Paris-headquartered company with directors from the British and French governments on its board and stock market listings in France and London. The UK Government has a golden share in OneWeb, providing certain guarantees over its business decisions, and owns a 10pc stake in the overall group.
At the time, the companies said the deal valued OneWeb at €3.4bn as a standalone business. However, the combined group is worth €1.3bn.
OneWeb has endured delays to building its network after Russia seized some of its satellites following the invasion of Ukraine, while it has been grappling with regulatory hurdles in certain markets.
Last week, analysts at S&P downgraded the company’s debt rating, pushing it further into junk territory with a B grade.
The S&P analysts said: “We expect Eutelsat’s loss-making LEO satellites division (OneWeb) and hefty capital expenditure capex needs will result in sustained negative cash flow in the next three to five years.
“Eutelsat is facing an increasingly tougher competitive environment amid Starlink’s expansion into business-to-business markets, the upcoming entry of Amazon Kuiper … and its delayed ramp-up of OneWeb’s global services.”