OneWeb Ltd., a satellite-internet startup whose backers include Airbus Group SE and entrepreneur Richard Branson, is in talks with Japan's SoftBank Group Corp. about a potential strategic linkup, according to people familiar with the matter.

No deal has been finalized, these people said, and OneWeb representatives also have engaged in discussions with other possible suitors. It isn't clear whether SoftBank, a global internet and telecommunications company with an interest in satellite technology, is seeking to become a minority funder or to acquire a significant stake in OneWeb. The talks haven't been reported before.

They were initiated as part of OneWeb's effort to raise roughly $500 million this fall to support its previously announced constellation of some 640 small, low-Earth orbit satellites designed to deliver fast broadband connections in rural and emerging markets. But as discussions with SoftBank progressed, according to one person familiar with the matter, the focus shifted to the possibility of a broader transaction.

It isn't clear which other companies may be involved in separate discussions with OneWeb and Chairman Greg Wyler, the founder and the chief architect of its proposed constellation.

Mr. Wyler has said OneWeb Satellites, a joint venture with Airbus, aims is to reshape the industry by setting up a proposed high-volume manufacturing facility in Florida. The goal is to turn out satellites on an automated assembly line akin to those now used for medical devices or airplane equipment. Airbus has set an aggressive price target of less than $1 million per satellite, versus traditional price tags amounting to hundreds of millions of dollars for larger and more capable spacecraft dependent on customized, hands-on assembly procedures.

The activity comes amid a world-wide resurgence of interest in small satellites, with dozens of fledgling manufacturers, service providers and launch companies scrambling to grab market share. With its prominent backers and high-profile chairman, OneWeb has been in the forefront of this trend and captured the imagination of well-known experts. Silicon Valley financier Steve Jurvetson, for example, told a conference in Long Beach, Calif., last month that the company's global dream of connecting schoolhouses to the internet is "one of the most enthralling and exciting things" in the digital arena.

Taking a stake in OneWeb would fit SoftBank Group founder and Chief Executive Masayoshi Son's long-term strategy of investing in technologies for a more connected world, and could create synergies with SoftBank's mobile operations.

Established in 1981 by Mr. Son, SoftBank was an early financial backer of Yahoo Inc., as well as Alibaba Group Holding Ltd., which has grown to become China's biggest internet shopping outlet.

Mr. Son's company bought U.S. mobile carrier Sprint Corp. in 2013 for $22 billion and operates Japan's third-largest mobile carrier. One of the markets OneWeb is looking at is supporting mobile-phone services.

SoftBank also has made some inroads into satellite technology. In February it announced that it intends to provide high speed LTE services in Japan partly by relying on Israel's Gilat Satellite Networks Ltd.'s technology. In 2014 SoftBank established a satellite research company called SoftBank Satellite Planning Corp. aimed at developing new satellite communications networks. Boeing Co. took an equity stake in the company in 2015.

SoftBank has been stepping up its pace of transactions, pouring more than $45 billion into technology investments alongside co-investors over the past two years, including a $32-billion deal to buy U.K.-based chip designer ARM Holdings PLC, whose chips power more than 95% of the world's smartphones.

SoftBank also has garnered additional investment firepower with a recently announced $100 billion technology-investment fund it is creating with Saudi Arabia's Public Investment Fund. SoftBank plans to invest at least $25 billion in the fund over the next five years. The Saudi fund could invest up to $45 billion during the same period, and more could come from other investors.

Write to Andy Pasztor at andy.pasztor@wsj.com and Alexander Martin at alexander.martin@wsj.com

(END) Dow Jones Newswires

October 25, 2016 13:15 ET (17:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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