Whitehall decisions on big projects can be notoriously slow. However, when one of India’s richest men, Sunil Bharti Mittal, met with Boris Johnson in Downing Street in June to discuss a secret joint venture to launch Britain into the space race, the deal took shape at rocket speed.
The Government had been hunting for a co-investor to rescue OneWeb, the collapsed satellite operator, amid fears it would fall into the hands of Chinese bidders. With the intervention of Mittal, the founder of Bharti Enterprises and the tycoon behind Airtel – one of the world’s biggest mobile phone operators – the deal was agreed within days.
By July 3, the UK had won the bidding war for OneWeb, with $500m (£375m) from the Treasury and $500m from Bharti.
The ambition is for OneWeb to create a constellation of 650 satellites to provide broadband to far-flung regions. The Government also believes it could provide a back-up/alternative to the US-controlled GPS system.
The deal closed on Nov 20. It sets the UK and its Indian partner on course for an unlikely venture into space. “As the Prime Minister pointed out in our meeting: India is developing on many fronts, but one area I have to salute you is that India is a first-rate space power,” Mittal says.
OneWeb | A tangled history
For both Mittal and No 10, the hope is not only to turn around a struggling satellite company, but to signal a new phase of relations between India and the UK in the space and defence sectors at a crucial moment.
“Coming out of Brexit, the UK and India will enter into trade negotiations and get a very beneficial deal,” Mittal says. “I will be pushing from both sides that space is right at the front of the agenda.”
Mittal, an entrepreneur who spun a small Punjabi business making bicycle crankshafts into a global empire that spans Africa, India and much of the rest of Asia, can add Johnson to the list of current and former world leaders he is acquainted with, along with Indian prime minister Narendra Modi and Barack Obama.
Founded in the Eighties, Mittal’s Bharti began life importing bike parts and generators. Mittal spotted a market for push button phones in India, back when rotary phones were common. The resulting company has grown to be India’s second-biggest telecoms network, Bharti Airtel, which has 400m customers worldwide.
Sunil Bharti Mittal, the Bharti Enterprises founder, is aiming to forge new links with the British Government
Credit: NurPhoto
Mittal’s recent deals have included the £3bn listing in London of Africa Airtel, and the £1.5bn merger of Bharti and Vodafone’s tower operations in India. He is now one of India’s richest businessmen, worth $10bn.
However, it has not all been plain sailing. In fact, the last five years in India’s cut-throat telecoms market will have given Britain’s new business partner an astute eye for costs and the competition. They will need it.
OneWeb’s biggest competitor is SpaceX, a company backed by Elon Musk, the world’s second-richest man.
Indian telecoms firms have been engaged in a ruthless price war and several smaller players have merged or collapsed, thanks to the launch of Jio, a budget network founded by India’s richest man, Mukesh Ambani of Reliance Industries.
According to Mittal at least, things are settling down. “I think the three-player market [Bharti, Vodafone and Reliance] is a natural balance,” he says. “Reliance is very strong in execution. It is hard to compete with them.”
The demands of Covid forced mobile networks to deal with a surge in home working. In India, many companies were mandated to work from home, with lockdown a particular challenge for those in rural areas.
The world’s most populous nation has suffered nine million recorded coronavirus cases and 135,000 registered deaths. Its economy sank 24pc last quarter.
Coronavirus India Spotlight Chart — Cases default
According to Mittal, however, there are signs of a recovery: “We have had a black swan event, but industry after industry is back very quickly to pre-Covid levels.”
For one thing, a vaccine could be on the way very soon. “There is some hope now,” he says. “We should be very generous with it. We must make sure the whole world is inoculated.”
Despite this year’s challenges, cash from Silicon Valley has been pouring into India’s technology sector as investors look to capitalise on the nation’s internet boom.
Ambani’s Reliance, which has launched an Amazon challenger called JioMart, secured $5.7bn from Facebook and $4.5bn from Google. “India is open to the world, you can put money in and take money out,” Mittal says.
“I am not surprised that Google and Facebook are putting money into India. China is shut to them.”
Sunil Mittal, chairman of Bharti Airtel Ltd., holds up his inked finger after casting his ballot during the sixth phase of voting for national elections in New Delhi, India, on Sunday, May 12, 2019.
Credit: T. Narayan/ Bloomberg
Mittal’s Bharti Enterprises, which has revenues of $16bn, has come a long way from selling spare parts. So too has India’s space ambitions. In the Sixties, the Indian Space Research Organisation used ox carts to haul rockets to its launch sites. Now, Mittal says, it is “one of the most exalted players in the space sector”.
India’s space authority and OneWeb are already in touch about potential future launches. The OneWeb deal concerns more than broadband. Its satellites could be a defence asset, serving as a kind of redundancy to GPS, the US navigation network.
Mittal believes this could lead to collaboration between British and Indian intelligence services, even putting India on a par with the famous Five Eyes partnership – made up of spooks from the UK, US, New Zealand, Australia and Canada. “While India is not a part of the Five Eyes alliance, the fact is India is a democracy,” he says.
“India can be brought into discussions in sharing intelligence and critical applications around OneWeb.”
Bharti has not been immune to geopolitical tensions, especially with China. Like many operators, it previously used kit from Huawei, the embattled Chinese telecoms manufacturer now blacklisted by the US.
Airtel has around 23pc Chinese kit in some of its networks, Mittal says, although not in its planned 5G networks. Huawei kit in its current infrastructure will be “slowly wound down over the next few years”.
On top of the potential influence the OneWeb deal confers, Mittal sees it as simply good business.
OneWeb _ Low orbit Satellites
He first invested in OneWeb in 2015, before selling his stake to his “old friend”, SoftBank’s Masayoshi Son. The company, he says, was “being pulled in different directions… my prediction turned out to be true”.
Now, he has bought into the bankrupt firm at a discount, with $3bn of investment already spent and 74 satellites in space. The benefits for Airtel’s network could include cutting the $50m per year in backhaul – essentially the backbone of the network – it spends with other satellite companies.
In time, its satellites will be able to provide an internet signal, which can be picked up on a satellite terminal. Mittal says: “I come from the world of fibre networks. We have been doing that for 36 years. But we couldn’t connect with everyone.”
OneWeb will mean the internet can be offered to “rural areas, far-flung schools, depots in mountains, critical government installations”. Of course, that depends on funding multiple rocket launches.
The first launch since OneWeb’s bankruptcy is due on Dec 17 and more cash is needed to complete the network. Another investor with $250m to $300m is “close to commitment”. They will need a further $800m.
While he was once just a small stakeholder, Mittal now holds the key to two nations’ space ambitions. It may raise eyebrows among some, but his son Shravin will hold a board seat.
Sunil Mittal CV
Mittal says: “I don’t bring any family emotions into business. But it was a revelation to me how much he has matured in the last few years.”
Of course, there are sceptics of the deal. OneWeb, which is headquartered in the UK but with its main factory in the US, is a huge gamble for a government accused of profligate spending. There are fears from some in Whitehall and industry rivals that its low-orbit satellites may not be best-suited to sat-nav capabilities.
Mittal says there are plans to bring much of OneWeb’s manufacturing from Florida in the US to the UK in future. He says: “People question why the British have put public money on this venture, which could be risky. I say, the Government has taken, for a very small amount, a big option in the space play.
“I am putting my own half a billion dollars in with confidence.”
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