OneWeb and a cardinal sin of space startups
OneWeb, now part of Eutelsat, is 12 years old, but is still paying for a common startup mistake: forgetting the ground segment. Eutelsat disclosed Jan. 29 that OneWeb, despite having all its 630+ satellites in orbit for months, is behind schedule, reflecting “delays in the availability of the ground network.”
Eutelsat lowered the midpoint of its revenue guidance for its fiscal 2023-24 year by 7% to €1.28 billion ($1.38 billion) and EBITDA by 14.2% to €665 million, and suspended guidance for the following year. Global OneWeb service, initially anticipated by the end of the calendar year, was not given a date. Instead, Eutelsat targeted having 90% of OneWeb’s ground network completed no later than June 30, 2024. Also impacting Eutelsat’s guidance is a revenue mix from OneWeb that leans more toward user terminal sales than capacity and network services.
OneWeb’s constellation depends on approximately 44 Hughes gateways spread out worldwide, each typically hosting around one or two dozen dishes. In contrast to SpaceX’s Starlink and Amazon’s soon-to-launch Kuiper network, OneWeb’s satellites do not have laser crosslinks, meaning until OneWeb’s gateways are all done, the network has dead zones.
How did OneWeb get here? The company launched its first satellites in 2019, but gateway rollouts weren’t pressed with urgency. In March 2020, just prior to OneWeb’s Chapter 11, the company reportedly had just three gateways commissioned. The Covid-19 pandemic and OneWeb’s eight months in Chapter 11 understandably delayed gateway construction, but satellite launches, which were also paused, resumed much faster.
Gateways are just as much a real-estate challenge as a satcom project. They require land with good visibility to the horizon and limited radiofrequency interference – features that typically put them in remote places – yet they also need robust fiber links, electricity, easy logistics, and security (cyber and sometimes physical). They are the perfect setting for delays with myriad causes only offset with ample prep time, something OneWeb didn’t always allocate. In a Jan. 29 conference call, Eutelsat CEO Eva Berneke said OneWeb has “just below 30” gateways completed. For example, Berneke said gateways in India and Saudi Arabia are nearly finished, while sites in Thailand and Turkey are awaiting regulatory approval for completion.
Eutelsat is waiting for gateway rollouts to finish to bill customers whose take-or-pay contracts cannot be executed. Per Berneke, OneWeb’s backlog is growing at a healthy clip and has now surpassed €1.1 billion (inclusive of a €275M Eutelsat deal), with contracts typically of five-year durations.
OneWeb’s second-generation constellation is widely expected to have laser crosslinks, making network improvements far easier. Berneke said Eutelsat and OneWeb are working through “co-engineering” with consortia teams from Request for Proposal bids that concluded last fall, and expects to choose a winner in the next month or two. Aiding that decision was today’s other major announcement that Airbus purchased Airbus-OneWeb Satellites joint venture for an undisclosed amount. Given the friction that grew between Airbus and OneWeb over the years, the dissolution of their shared company was a long time coming. Plus, the pressure on Eutelsat to select a European site for manufacturing OneWeb Gen-2 essentially strands the JV in Florida.
SOURCE: https://www.eutelsat.com/files/PR_0124_TRADING%20UPDATE%20Final.pdf