Orbcomm Expects Revenue Boost Now that SpaceX Has Patched Firm’s “Hole in the Sky”

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PONTE VEDRA, Florida — Mobile machine-to-machine satellite-messaging service provider Orbcomm on Aug. 7 said the six second-generation satellites it launched on July 14 are proceeding through in-orbit tests and should be in service by September.

The satellites, launched together on a Space Exploration Technologies Corp. Falcon 9 rocket, are expected to fill what Orbcomm Chief Executive Marc J. Eisenberg calls “a hole in the sky” of Orbcomm’s global network, and one that has limited revenue growth.

“It’s tough to overstate the impact on service levels of the new satellites,” Eisenberg said in a conference call with investors. He reiterated that the new spacecraft would add $2 million to $4 million to Orbcomm revenue on their own.

Once the hole is filled with five of the six new satellites — the sixth will operate from a different orbital plane — Orbcomm expects the revenue boost to show up in the company’s financial reports as soon as the end of this year.

The launch, plus developments of Orbcomm’s gateway Earth station network, most recently with installations in Brazil and Oman, should also usher in a fuller globalization of Orbcomm, which still generates three-fourths of its revenue from U.S. customers. Like the satellites, Orbcomm’s ground network has had gaps that have stunted growth in certain areas of the world.

In a conference call with investors, Eisenberg said the Oman gateway Earth station “will fill a major gap in our Earth station coverage between the [facilities] in Italy and Kazakhstan.”

The July 14 launch was of six of the 18 second-generation satellites. The remaining 11 are scheduled for launch in the coming months on a single SpaceX Falcon 9.

The launch had been scheduled for late this year, but Eisenberg said it may slip to early 2015. Hawthorne, California-based SpaceX is faced with a crowded manifest in 2014 and is already several months behind the schedule originally announced. The question has been how many satellites manifested for 2014 would be moved into 2015.

During the conference call, Eisenberg did not evoke a SpaceX launch bottleneck. Instead, he suggested it was Orbcomm that would prefer not to rush into a second launch before the first satellites are thoroughly tested. “Before I give you an exact date, let’s get these guys in service and make sure they’re performing as expected,” he said.

Orbcomm insured the first six satellites for $66 million for the launch plus one year’s operations. A separate $22 million policy covered only the launch. The company paid a premium of $9.9 million for the two policies, a rate of 11.3 percent.

Insurance underwriters have said that before approving a second launch, they want to be sure that the first satellites, using a new skeletal structure developed by Sierra Nevada Corp. of Sparks, Nevada, and a payload built by Boeing subsidiary Argon ST of Fairfax, Virginia, are performing well.

The second launch is insured for $144 million, including $22 million for the launch phase only, for which Rochelle Park, New Jersey-based Orbcomm paid an 11.6 percent premium.

The Orbcomm launch was delayed on multiple occasions following different issues that arose with the SpaceX Falcon 9, but as is often the case following successful launches, all is forgiven at Orbcomm given the precision of the in-orbit injection.

Eisenberg said the Falcon 9 delivered the satellites into an orbit whose inclination relative to the equator was within 0.005 degrees of the targeted 47 degrees, with an apogee of 720.5 kilometers and a perigee of 619.5 kilometers — both 0.5 kilometers from the target.

“It doesn’t get much better than that,” Eisenberg said.

The company had reserved more than 10 kilograms of propellant on the spacecraft to be used to correct the orbit in the event the launcher dropped them off wide of the mark. That fuel may now be used to perform maneuvers during the satellites’ life as needed, or to extend their in-orbit life.

The second-generation Orbcomm satellites are backward compatible with existing subscribers’ equipment but for subscribers purchasing new gear the satellites will offer higher throughput on messages and quicker message delivery.