Taxpayers face a £200m loss from satellite business OneWeb following rescue orchestrated by Dominic Cummings

OneWeb has launched more than 640 low-orbit satellites designed to provide communications in remote areas

The British taxpayer is sitting on a £200 million loss rescuing satellite company OneWeb after the government rescued it during the pandemic.

The value of the government's stake in OneWeb has more than halved since its merger with Paris-based Eutelsat. publicly traded space company in an all-stock deal.

The government rescued OneWeb in 2020 after it filed for bankruptcy. The surprise decision to rescue the satellite company was driven in part by Dominic Cummings, who was a key adviser to Prime Minister Boris Johnson at the time.

The rescue was prompted by fears that China might try to take control. struggling business.

It was also seen as a strategically important enterprise. The company, which competes with Elon Musk's Starlink, has so far launched more than 640 low-orbit satellites designed to provide communications in remote areas.

OneWeb's technology has been trialled in the UK to provide rural broadband.

The British government has invested around £400 million in OneWeb, which has also received additional funding from Indian telecoms company Bharti.

p> The surprise decision to rescue OneWeb was driven in part by Dominic Cummings, who was a key adviser to Prime Minister Boris Johnson. Photo: James Manning/PA

Eutelsat announced plans to merge with OneWeb last year and completed the deal in September.

However, since the deal was first announced, the French company's share price has fallen, resulting in taxpayers' share of the combined business being less than half the amount invested in OneWeb.

The sale left the taxpayer with a stake in the French company worth approximately €225 million (£195 million). Eutelsat's share price has fallen by about a quarter since the deal.

The British government owns about 11% of the combined satellite business and also has a seat on the board, as does the French government.

Before news of the OneWeb deal broke last year, Eutelsat shares were trading above 10 euros. However, shares fell to a record low of €3.70 earlier this month. The shares closed at €4.36 on December 22.

Eutelsat came under pressure after investors pulled out of a deal with OneWeb that would have valued the UK business at $3.4bn (£2.7bn) sterling).

OneWeb will need as much as $4 billion to build the next generation of satellites. a sum that has raised concerns among Eutelsat shareholders as rising interest rates make investments more costly.

In November, Fitch analysts downgraded Eutelsat's debt rating, warning that the company has now «significantly increased execution and freed up cash.» flow risks» after the merger.

Analysts added that Eutelsat faced increased competition from Elon Musk's Starlink. The billionaire launched thousands of satellites into Earth orbit to provide broadband communications, creating direct competition for OneWeb.

Under Chief Executive Eva Bernecke, Eutelsat hopes to at least partially finance the cost of the OneWeb upgrade with funds from a major EU space project.

The European Commission is hoping to create a domestic competitor to Starlink so it doesn't have to rely on the eccentric Mr Musk. Satellite broadband has proven its critical role in recent conflicts such as the war in Ukraine.

Eutelsat is now worth less than €2 billion, even after its merger with OneWeb. Meanwhile, Mr. Musk's Starlink is canvassing investors for a funding round that would value his company at $180 billion.

An industry source said: «Eutelsat should get the EU project.»

In October, Eutelsat reported a 4.7% decline in its first-quarter results. his income. However, the company said OneWeb has satellite network orders totaling $1 billion.

A government spokesman said: “Share prices fluctuate in the short term, but this is a long-term investment.”

< p >The value of the government stake rose for a time after OneWeb attracted new investors, including Japan's SoftBank and then Eutelsat.