A report from analysts at Quilty Analytics says that despite OneWeb’s much-publicized Chapter 11 problems, all is not lost as far as Low Earth Orbit schemes are concerned.
“OneWeb suffered from a significant first-mover disadvantage, a competitively inferior system (as a result of early design decisions and trade-offs), and inadequate financing (largely due to investor skepticism),” says Quilty. “In short, we don’t think that OneWeb’s demise is indicative of the prospects for LEO Broadband as a whole.”
OneWeb entered its ‘debtor in possession Chapter 11 on March 27 and, says Quilty, “represents the most significant failure of a Space industry start-up since the early 2000s and could represent a potential game-crasher for the current “NewSpace” investment wave that kicked off in the mid-2010s.”
OneWeb has dramatically trimmed its staff levels (from 531 full-time employees to just 74) and retaining only a skeleton crew necessary to safely “fly” the company’s on-orbit satellites and shepherd the bankruptcy process.
Quilty states that — in simple terms — OneWeb has three possible paths forward:
- Raise additional capital,
- Sell the company, or if unsuccessful in the first two options,
- Liquidate the assets.
The analysts reckon that Option 1 is “dead on arrival” adding: “According to OneWeb’s Chapter 11 filing, ‘The Debtors believe that conducting an open and competitive marketing process represents the best strategy to maximize value for their various stakeholders.’ In other words, management is resigned to selling the company (Option #2) or, barring that, liquidating its assets (Option #3).”
Quilty states bluntly that it doubts whether there will be queue of potential buyers. “It seems unlikely that any (well-informed) strategic buyer would be eager to simply step into OneWeb’s shoes and soldier on with the company’s current business plan. Absent a strategic buyer with interest in pursuing OneWeb’s original business plan, the question centers around the attractiveness of OneWeb’s assets, which are shockingly few in light of $3.4 billion cumulative investment, offering a cautionary tale for those considering an investment in remaining LEO/NGSO constellations.”
Which brings the choices down to Option 3. Quilty list the company’s assets such as they are, as:
- Launch prepayments
- Landing rights
- OneWeb Satellites (50 per cent stake)
- Patents, technology, designs, partnerships
- Spectrum granted to OneWeb
Quilty states, quite reasonably, that spectrum has a value, but that it is difficult to quantify and the end result could easily be that OneWeb’s allocated spectrum might be worth anything between $10 million and $1 billion.