U.K.’s Sharma Overrode Official Concern Over OneWeb Purchase

(Bloomberg) -- U.K. Business Secretary Alok Sharma overrode the concerns of his department’s accounting officer when he authorized the U.K. purchase of bankrupt satellite operator OneWeb.

Sam Beckett, accounting officer for the Department for Business, Energy and Industrial Strategy, wrote to Sharma on June 26 saying he wasn’t satisfied the OneWeb bid represented “value for money.” He requested a formal ministerial direction to approve the plan, which Sharma provided, according to documents posted online by the department on Wednesday.

The U.K. government and Indian telecommunications tycoon Sunil Mittal won an auction for OneWeb on July 3, with each committing $500 million in a deal expected to close by the year-end. The transaction will give the U.K. a 45% stake in a company which has been building a constellation of low orbit satellites to provide internet services outside urban areas.

“The purchase -- both in its scale and the fact that the company is early in its journey towards a first-of-a-kind satellite constellation and generating revenue -- is unusual for government,” Beckett wrote. “There remain a very broad range of uncertainties and possible outcomes around this case, so it is hard at this time to be confident in the underlying assumptions or the likely returns.”

Part of the U.K.’s interest in supporting OneWeb is to form the basis for a new national navigation system after the European Union froze Britain out of the most secure elements of the bloc’s Galileo project. Officials have also touted the wider benefits for connectivity.

‘Mega-Constellation Operator’

“It would be the first mega-constellation operator, if it succeeds, and would have the potential to connect millions of people, in particular those in remote, rural locations without broadband access,” Sharma wrote in his reply to Beckett. “There could be wider, less quantifiable benefits of signaling U.K. ambition and influence on the global stage.”

Beckett acknowledged potential benefits of the purchase, but also flagged that “there is a high likelihood of further investment being required” from the government “to complete the constellation and encourage user uptake of the services.”

It’s not the first time this month a minister in Boris Johnson’s government has had to write such a letter, after Chancellor of the Exchequer Rishi Sunak did so to formally override the concerns of Treasury officials over aspects of his plans to reboot the U.K. economy. Such letters are rare -- the Institute for Government said last month that 84 had been sent in the last 30 years, or about two to three a year.

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