OneWeb in Talks With Japan's SoftBank About Potential Linkup
October 25 2016 - 1:30PM
Dow Jones News
OneWeb Ltd., a satellite-internet startup whose backers include
Airbus Group SE and entrepreneur Richard Branson, is in talks with
Japan's SoftBank Group Corp. about a potential strategic linkup,
according to people familiar with the matter.
No deal has been finalized, these people said, and OneWeb
representatives also have engaged in discussions with other
possible suitors. It isn't clear whether SoftBank, a global
internet and telecommunications company with an interest in
satellite technology, is seeking to become a minority funder or to
acquire a significant stake in OneWeb. The talks haven't been
reported before.
They were initiated as part of OneWeb's effort to raise roughly
$500 million this fall to support its previously announced
constellation of some 640 small, low-Earth orbit satellites
designed to deliver fast broadband connections in rural and
emerging markets. But as discussions with SoftBank progressed,
according to one person familiar with the matter, the focus shifted
to the possibility of a broader transaction.
It isn't clear which other companies may be involved in separate
discussions with OneWeb and Chairman Greg Wyler, the founder and
the chief architect of its proposed constellation.
Mr. Wyler has said OneWeb Satellites, a joint venture with
Airbus, aims is to reshape the industry by setting up a proposed
high-volume manufacturing facility in Florida. The goal is to turn
out satellites on an automated assembly line akin to those now used
for medical devices or airplane equipment. Airbus has set an
aggressive price target of less than $1 million per satellite,
versus traditional price tags amounting to hundreds of millions of
dollars for larger and more capable spacecraft dependent on
customized, hands-on assembly procedures.
The activity comes amid a world-wide resurgence of interest in
small satellites, with dozens of fledgling manufacturers, service
providers and launch companies scrambling to grab market share.
With its prominent backers and high-profile chairman, OneWeb has
been in the forefront of this trend and captured the imagination of
well-known experts. Silicon Valley financier Steve Jurvetson, for
example, told a conference in Long Beach, Calif., last month that
the company's global dream of connecting schoolhouses to the
internet is "one of the most enthralling and exciting things" in
the digital arena.
Taking a stake in OneWeb would fit SoftBank Group founder and
Chief Executive Masayoshi Son's long-term strategy of investing in
technologies for a more connected world, and could create synergies
with SoftBank's mobile operations.
Established in 1981 by Mr. Son, SoftBank was an early financial
backer of Yahoo Inc., as well as Alibaba Group Holding Ltd., which
has grown to become China's biggest internet shopping outlet.
Mr. Son's company bought U.S. mobile carrier Sprint Corp. in
2013 for $22 billion and operates Japan's third-largest mobile
carrier. One of the markets OneWeb is looking at is supporting
mobile-phone services.
SoftBank also has made some inroads into satellite technology.
In February it announced that it intends to provide high speed LTE
services in Japan partly by relying on Israel's Gilat Satellite
Networks Ltd.'s technology. In 2014 SoftBank established a
satellite research company called SoftBank Satellite Planning Corp.
aimed at developing new satellite communications networks. Boeing
Co. took an equity stake in the company in 2015.
SoftBank has been stepping up its pace of transactions, pouring
more than $45 billion into technology investments alongside
co-investors over the past two years, including a $32-billion deal
to buy U.K.-based chip designer ARM Holdings PLC, whose chips power
more than 95% of the world's smartphones.
SoftBank also has garnered additional investment firepower with
a recently announced $100 billion technology-investment fund it is
creating with Saudi Arabia's Public Investment Fund. SoftBank plans
to invest at least $25 billion in the fund over the next five
years. The Saudi fund could invest up to $45 billion during the
same period, and more could come from other investors.
Write to Andy Pasztor at andy.pasztor@wsj.com and Alexander
Martin at alexander.martin@wsj.com
(END) Dow Jones Newswires
October 25, 2016 13:15 ET (17:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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