The future of SoftBank-backed satellite operator OneWeb was cast into doubt after the UK government rejected demands from Russia—which hosts the firm's satellite launches—that it sell its stake. 

Earlier this week, Russia's state space agency, Roscosmos, held OneWeb's satellites hostage ahead of a scheduled mission launch. The agency demanded guarantees that the spacecraft would not be used for military forces and that its majority owner—the UK government—would sell its OneWeb stake. 

Yesterday, the UK's business secretary Kwasi Kwarteng rejected both demands, tweeting: "There's no negotiation on OneWeb: the UK Government is not selling its share." The company's board, which also includes Bharti Global and SoftBank, backed the stance and agreed to suspend operations in Russia.

OneWeb was rescued from bankruptcy in July 2020 by a consortium including the UK government after the company failed to secure new funding due to the pandemic. Founded in 2012, OneWeb has raised more than $4 billion from both corporate and VC investors.

OneWeb has been exclusively using Russia's Soyuz rocket to help it build a constellation of low Earth orbit satellites, which are intended to provide internet coverage from space. It will now have to find and pay for alternative launch sites. The Financial Times reported that the cost of suspending future launches in Russia could amount to around $300 million. It also threatens OneWeb's plans to roll out a global service by the end of the year. 

OneWeb's struggles are likely to boost competitors including Elon Musk's Starlink, which is operated by SpaceX. Earlier this week, Musk donated satellite internet terminals to Ukraine, where internet connections have been disrupted because of the Russian invasion. SpaceX, which is worth over $100 billion, is currently the second-most valuable VC-backed startup in the US, according to PitchBook data.

Featured image by Michael Dunning/Getty Images

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