EchoStar says Jupiter-3 launch timing clouded by coronavirus

by

WASHINGTON — The coronavirus pandemic and the transition launch providers are making to new rockets is complicating EchoStar’s reservation of a launch slot for its Jupiter-3 broadband satellite, according to company executives. 

Since ordering the 500 gigabit-per-second Ka-band satellite from Maxar Technologies in 2017, EchoStar has planned to launch it in 2021 to bring growth capacity over North and South America for the company’s satellite internet business.

EchoStar Chief Strategy Officer Anders Johnson said the coronavirus pandemic is making it tough to narrow down Jupiter-3’s completion date with enough confidence to sign a launch contract. 

“We have deferred [the launcher selection] decision partly out of prudence,” Johnson said during a May 7 call with analysts to discuss EchoStar’s first quarter results. “Because, obviously as soon as we order a launch vehicle, we are going to have to start making payments on it. So we’ve deferred that decision until we get some greater specificity as to when the satellite will be completed.”

Pradman Kaul, president of Hughes Network Services, EchoStar’s largest business unit, said EchoStar was among the customers Maxar sent force majeure notices that the coronavirus pandemic may delay spacecraft production. 

EchoStar’s best guess at when Jupiter-3 will launch is now the second half of 2021, Kaul said, a timeframe when Arianespace, United Launch Alliance and Mitsubishi Heavy Industries will all be transitioning to new rockets. Expanded offerings from Northrop Grumman and Blue Origin are also slated for 2021 introductions, plus SpaceX this year according to the company’s website. 

Johnson said the coronavirus is compounding uncertainty around when new launch vehicles will be ready, since new rockets have a “natural tension” on their schedule on the best days. EchoStar is in discussions with every launch provider capable of lofting the Jupiter-3 satellite, he said. 

The pandemic already delayed a March launch of two S-band cubesats EchoStar ordered from Tyvak Nano-Satellite Systems, Johnson said. A new date with an undisclosed launch provider has not been set, though the mission is expected to occur this year, he said. 

Residential business update

Any delays with Jupiter-3 will mean a longer wait for EchoStar to add capacity over the United States where its residential broadband business is strongest. EchoStar added 39,000 new subscribers in its Hughes Network Services business during the first three months of 2020, bringing its total subscriber count to 1.52 million. 

Hughes is the largest revenue generator for EchoStar, pulling in $458.5 million of EchoStar’s $465.7 million in revenue for the three months ending March 31. EchoStar reported a $57.7 million net loss for the quarter. 

Kaul said demand for its satellite internet service was strong during the first quarter and April with millions of Americans working from home amid state-ordered lockdowns that are only now beginning to ease. 

“The only limitation there is the lack of new capacity in the United States,” Kaul said. 

Michael Dugan, EchoStar’s chief executive, said the company has sellable U.S. capacity left on its Jupiter-2 satellite, which launched in 2016, but not near urban centers. 

EchoStar is continuing to expand into South America, mainly using capacity on a Telesat satellite, a Eutelsat satellite, and Yahsat’s Al Yah 3 satellite. Hughes, in partnership with Facebook, has more than 1,000 Wi-Fi hotspots across Brazil, Mexico, Colombia and Peru, Kaul said, with expansions planned later this year into Ecuador and Chile. 

Kaul said Hughes saw coronavirus-induced reductions in demand from the aviation and oil and gas sectors, but that widespread work-from-home orders have strengthened demand from employers and households for reliable, robust internet connectivity. 

OneWeb work idled

EchoStar was building and shipping gateway ground stations to OneWeb before the megaconstellation startup filed for Chapter 11 bankruptcy protection March 27. 

David Rayner, EchoStar’s chief operating officer and chief financial officer, said OneWeb gateway production stopped when the startup went bankrupt after launching just 74 of a target 650 small broadband satellites. 

EchoStar had a 2.57% stake in OneWeb, a $190 million gateway production contract, and had announced March 9 that its Hughes business had become a distribution partner for OneWeb. Rayner said EchoStar’s OneWeb investment is now fully impaired, meaning it is worth less than what EchoStar put into the company. 

EchoStar, with the bankruptcy court’s approval, signed a “small agreement” with OneWeb to document development work on the gateways, which were designed to switch data traffic between satellites at a rate of 10,000 user terminals per second. 

Rayner said EchoStar has some OneWeb gateways in storage that were mostly paid for in advance. If OneWeb finds a buyer for its assets, EchoStar is well positioned to resume work on the constellation’s infrastructure, Dugan said.

OneWeb said at the time of its bankruptcy filing that half its 44 gateway stations were completed or in development. 

Dugan said EchoStar has no interest in buying OneWeb assets — OneWeb’s spectrum licenses are its primary selling point — but wouldn’t rule out the possibility. 

OneWeb’s bankruptcy court set July 2 as an auction date, but requires prospective buyers to file a final bid by June 26 in order to participate.