Facebook, Eutelsat To Pay Spacecom $95M for Ka-band Lease
PARIS — Social media giant Facebook and satellite fleet operator Eutelsat have agreed to pay $95 million over about five years to lease the Ka-band spot-beam broadband capacity on a satellite scheduled to launch in mid-2016 and to provide service for Facebook’s Internet.org and a new Eutelsat subsidiary focusing on African businesses.
The lease of all the Ka-band capacity on Israel-based Spacecom Ltd.’s Amos-6 satellite — about 18 gigabits per second of throughput — can be extended for up to two years at a reduced rate, Spacecom said in an Oct. 6 filing with the Tel Aviv Stock Exchange.
The contract includes a provision that Spacecom purchase, on behalf of Eutelsat and Facebook, an insurance policy covering project-related risks that would not otherwise be covered by Spacecom’s own insurance policy covering the satellite’s launch and first year in orbit.
Eutelsat and Facebook will be taking out a third policy on their own to further reduce their risk exposure.
Amos-6 is tentatively scheduled for launch in mid-2016 aboard a Falcon 9 v1.2 rocket built and operated by SpaceX of Hawthorne, California. A lighter version of that rocket, which is being phased out this year, failed in June. SpaceX hopes to return to flight, with the enhanced-version Falcon 9 Upgrade, in November.
In its filing, Spacecom said that while its customers — Facebook and Eutelsat, even though only Paris-based Eutelsat is named in the filing — are responsible for building three gateway Earth stations, the Israel gateway will revert to Spacecom ownership at the end of the lease at no charge to Spacecom.
It is Spacecom’s responsibility to secure the needed gateway operating licenses in Israel, the filing said.
Amos-6 will operate at 4 degrees west in geostationary orbit. Eutelsat and Facebook are likely to coordinate the purchase of user terminals to save costs but are otherwise developing separate businesses, with Facebook’s Internet.org focusing on its Internet-for-everyone mission.
Facebook and Eutelsat have the right to terminate the contract if the satellite and the gateway are not ready for service by Jan. 1, 2017. The lease extends to September 2021, with an option for a two-year extension. The satellite itself has a contracted orbital service life of 15 years.
Spacecom secured a $105.4 million loan from the U.S. Export-Import Bank covering the satellite’s launch; the U.S. equipment on the satellite itself, whose prime contractor is Israel Aerospace Industries; and the management of the insurance policy by broker Marsh USA.