SpaceX competitor OneWeb files for bankruptcy

Featured Image Source: OneWeb

SpaceX competitor, OneWeb, a satellite internet startup with 72 internet-beaming satellites in orbit, has filed for Chapter 11 bankruptcy, according to Financial Times. This move comes after its largest investor, Softbank, declined additional funding. On Friday, OneWeb announced it is filing for bankruptcy at the U.S. Bankruptcy Court in New York's Southern District. The startup stated that the ongoing Coronavirus pandemic affected the company's ability to receive aid from investors to stay afloat. Adrian Steckel, CEO at OneWeb, said in a press release:

"It is with a very heavy heart that we have been forced to reduce our workforce and enter the Chapter 11 process while the Company's remaining employees are focused on responsibly managing our nascent constellation and working with the Court and investors. Our current situation is a consequence of the economic impact of the COVID-19 crisis."

Steckel said, in reference to the illness caused by a novel coronavirus strain that has spread globally. "We remain convinced of the social and economic value of our mission to connect everyone everywhere."

OneWeb representatives stated that they were in discussions with SoftBank to recieve funding but that the "market turbulence" caused by the coronavirus outbreak's effects to the economy, was a factor that contributed to not closing a deal with SoftBank. "Since the beginning of the year, OneWeb had been engaged in advanced negotiations regarding investment that would fully fund the Company through its deployment and commercial launch." OneWeb officials said, "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."

OneWeb was a key competitor to SpaceX's Starlink network. SpaceX is in the process of deploying the world's largest internet-beaming satellite constellation to offer worldwide broadband service. Starlink will serve areas on Earth where internet is unreliable or non-existent. The rocket company currently has about 360 satellites in low Earth orbit, out of the 12,000 it plans to deploy. OneWeb has 72 satellites in orbit, they had plans to deploy about 600 more.

In October 2019, SpaceX President Gwynne Shotwell was very vocal about her belief that OneWeb would not survive, "Our competitors are largely these new entrants to the market. OneWeb? We are 17 times better per bit," she assured to investors at the Metropolitan Opera House, "If you’re thinking about investing in OneWeb, I would recommend strongly against it. They fooled some people who are going to be pretty disappointed in the near term."

Early March, during the Satellite 2020 conference in Washington D.C. SpaceX founder and chief executive Elon Musk, was asked if he had plans to spin-off Starlink into a separate company in order to pursue an IPO, he said he was thinking about that "Zero." He explained that most satellite start-ups go bankrupt and that he was mainly focused on developing a successful Starlink network. "We need to make the thing work. [...] Guess how many LEO constellations didn’t go bankrupt? Zero." Musk said during the conference, in reference to several telecommunication companies, like Iridium, Globalstar, Orbcomm and Teledesic, that attempted to build satellite constellations in low Earth orbit and went bankrupt at some point. SpaceX wants to make sure that Starlink won't go bankrupt. "I mean it’s really important to set the stage here for [low Earth orbit] communications constellations." Musk added:

"That would be a big step, to have more than zero in the 'not bankrupt' category, that's our goal."

OneWeb now joined the companies in the bankrupt category, that ran out of funding to deploy a satellite network.