TAMPA, Fla. — Electrical issues disclosed a few months ago on the first four O3b mPower satellites in medium Earth orbit will significantly reduce their operational life and broadband capacity, their operator SES announced Oct. 31.
SES interim CEO Ruy Pinto said getting the performance originally expected from the next-generation MEO constellation will require Boeing to build two more O3b mPower satellites than initially planned, alongside upgrades on five others already in the works.
Two upcoming O3b mPower satellites set to launch in a few weeks will not have these upgrades to enable SES to start initial services no earlier than April.
SES had planned to launch O3b mPower commercially later this year before experiencing a glitch that is sporadically tripping off power modules on the satellites.
Pinto said the delay has reduced the revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) the operator expects to make in 2024 by around 5%.
Despite Boeing now under contract to supply 13 O3b mPower satellites rather than 11, and the work needed to upgrade five of them, Pinto said SES does not expect to spend more money on the constellation because of a risk-sharing deal with the manufacturer.
Boeing recently disclosed $315 million of losses on a satellite contract to meet life cycle commitments for an undisclosed customer. A source close to Boeing confirmed SES is this customer.
Pinto said SES could also potentially claim insurance proceeds for O3b mPower’s issues, which would worsen an already challenging year for space insurers.
Each satellite was designed to scale to multiple gigabits per second of throughput, roughly 10 times more than the operator’s first generation of 20 O3b satellites in MEO, with an operational life of about 10 years.
SpaceX has a contract to launch the 11 satellites under SES’s original order with Boeing and was slated to launch the seventh and eighth O3b mPower satellite this year.
SES said this pair will now launch in the second half of 2024 to include Boeing’s remedies. O3b mPower satellites nine to 11 are slated to launch in 2025, with the pair of extra spacecraft set to be deployed the following year
Increasing problem
Initial assessments had indicated no loss of life when O3b mPower’s power module issues first emerged.
However, SES said in an Oct. 31 earnings news release that there had been an increase in the number of power module switch-offs in the past few months, including “a few non-recoverable events.”
Pinto said the operator is continuing to pursue potential mitigation strategies that could reduce the financial impact of its O3b mPower delay, including drawing from the geostationary satellites the operator uses for connectivity and broadcast services.
Growth projects could also be supported by the $3 billion SES said it received in October for clearing C-band spectrum for 5G operators in the United States.
SES reported 507 million euros ($537 million) in revenue for the three months to the end of September, up 3.1% year-on-year.
Adjusted EBITDA fell 4.5% to 792 million euros when excluding the C-band windfall. The operator expects to report between 1.95 billion and 2 billion euros in revenue for 2023, and between 1.01 billion and 1.05 billion euros in adjusted EBITDA.
IT veteran Adel Al-Saleh is due to replace Pinto as CEO in February.
