Bharti to invest additional Rs 3,700 cr into OneWeb

Bharti Enterprises is investing USD 500 million (more than Rs 3,700 crore) in the satellite communications company OneWeb. The investment comes as OneWeb prepares for its eighth launch that is scheduled to take place on July 2. 36 more satellites will be sent to lower earth orbits as the company continues to build space-based internet services. Bharti Enterprises Founder and Chairman Sunil Mittal spoke to CNBC on these developments.

Q: You made an initial investment into OneWeb taking it out of bankruptcy with the UK Government last year. Now with this new USD 500 million investment, it secures USD 2.4 billion in total funding, why do this now, why exercise these options now?

A: Any call option has a period of time in which you must exercise. While there is some more period left, this will bring certainty to the investors or employees or vendor community. We needed USD 2.3 billion and now we have USD 2.4 in the bag and a few more investors are knocking very hard. We may or may not take some more money, but the fact is this company now is fully funded. And do keep in mind that there is no debt that has been taken on the books of this company. So we are all secure and set now to do exactly what you are set up to do which is to provide broadband satellite services, to telecom operators, to maritime aviation, rural broadband, etc.

Q: Elon Musk, which has SpaceX building out Starlink, which I know is not necessarily a direct competitor of OneWeb but is also involved in this low Earth orbit broadband race if you will, that building out that constellation was USD 5 to 10 billion to get to cash flow positive and then potentially tens of billions more in terms of upkeep for Starlink. What are the economics around that? How are you able to keep an eye say this low in quotes, but how are you able to keep it so low in terms of the cost to build this out.

A: One fundamental issue is the orbits we are placing our satellites. The closer you are to the earth, the more the number of satellites you need by a long, wide margin. So against 648 satellites, you will need at least 6,000-7,000 satellites to do the same job. So that is one big difference that brings more launches, that means more satellites. I think the second part is we are benefited from the pre chapter 11 spend of about USD 3.4 billion, which we acquired for nothing, and therefore our additional USD 2.3 billion, which means a total investment of USD 5.5 billion, does a job which most of the others will do at 10 to USD 15 billion. So that are the two fundamental factors in our favour, that will have the lowest cost to serve in the marketplace.

Q: We have been hearing about this possibility of low Earth orbit broadband service for the better part of two decades, I realized launch services have come down quite a bit over that time period. But in general, when you step back, and you think about this, both, I guess from a personal standpoint as the chairman of OneWeb, but also as the founder of Bharti Enterprises, which has a telecom company and so many other companies across so many other industries that are experiencing digitization right now, why is this a good investment right now what makes a compelling?

A: I come from the world of telecommunications. Currently, on my terrestrial networks covering 17 countries, I have over 250,000 cell sites. And not to talk about radio base stations, which may be over a million towers. If I cover the 17 countries with 658 towers in space, I will be covering the whole globe. This is a powerful proposition.

And if I understand my business well, providing connectivity to places where we will never be able to reach with fibre or even terrestrial radio, we will be able to have a very strong business case. In my own opinion, places in Sub Saharan Africa where we operate very large parts of India, deserts in Rajasthan the deep forests in Madhya Pradesh and of course the entire coastal area and not to forget the very poor aviation services that we all get today in aircraft is all set to change and there is a tremendous amount of enthusiasm.

We have just signed a first big deal with BT, we have assigned two operators in Alaska, more people are being spoken to, to build a very large interest and I am going to complement what they do on the ground with something from the space. If you heard Mr Musk yesterday in Barcelona, he has moved his position to where we were from day one that we will not compete with mobile operators, we will cooperate with them. I mean he has come there. CNBCTV18