Iridium Selects Thales Alenia To Build Iridium Next Constellation

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PARIS — Mobile satellite services provider Iridium Communications on June 2 announced it has selected Thales Alenia Space of France to build Iridium’s second-generation constellation of low-orbiting voice and data communications satellites in a $2.1 billion contract that still needs final validation by France’s export-credit agency, Coface.

Coface approval, which for now is limited to a “promise of guarantee,” is expected to take several months. To enable work on satellites to start immediately, Iridium and Thales Alenia Space have signed a $53 million authorization to proceed, which is expected to cover three months’ work at the Cannes, France-based manufacturer.

This precontract work could be extended for another three months, through November, for a second payment of $53 million. Thales Alenia Space and Iridium say the current schedule calls for a first launch of an undetermined number of Iridium Next satellites in early 2015.

McLean, Va.-based Iridium had been negotiating for months with both Thales Alenia Space and Lockheed Martin Commercial Space Systems of Sunnyvale, Calif. Because some of the Iridium satellite technology is expected to be prohibited from export to France, Iridium had structured its competition so that whichever company was selected, the final integration and testing of the Iridium Next satellites would be performed in the United States.

Reynald Seznec, chief executive of Thales Alenia Space, said in a June 2 interview that work corresponding to 50 percent of the contract’s value of $2.1 billion would be performed in France, 40 percent in the United States and 10 percent in Italy, Belgium and other nations.


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The satellites’ final assembly, integration and testing will be performed at Ball Aerospace & Technologies Corp.’s Boulder, Colo., facilities, Seznec said.

Each satellite is expected to operate for at least 10 years in its 780-kilometer orbit and to generate 2 kilowatts of on-board power. Seznec said the second-generation constellation, like the first, will feature intersatellite links, a feature that makes the Iridium system less dependent on ground stations to relay signals.

Thales Alenia Space is negotiating with MDA Corp. of Richmond, British Columbia, to manufacture the terminals to provide the intersatellite signal transfers. Chicago-based Boeing is expected to provide test equipment, system-specification assistance and call-routing software.

The need to perform substantial work on U.S. soil, plus the relatively low value of the U.S. dollar compared with the euro — until recently — would have given an advantage to the Lockheed bid. But Iridium had also based its selection on the availability of export-credit agency backing for the two bidders.

Iridium had hired Goldman Sachs and a team of lawyers to try to win the support of the U.S. Export-Import Bank despite the fact that Iridium and Lockheed Martin are both U.S. companies. Export-Import Bank financing is intended to support overseas exports of U.S. goods and services.

France’s Coface, however, which has been the world’s most active export credit agency in backing satellite projects, indicated early on that it would be prepared to stand behind the Thales Alenia Space bid, much as it is guaranteeing loans for Iridium’s competitor, Globalstar Inc. of Milpitas, Calif. Thales is building 24 satellites for Globalstar’s next-generation constellation.

Iridium Chief Executive Matthew J. Desch, in a June 2 interview, declined to say whether Iridium had succeeded in winning a promise of support for the Lockheed bid from the U.S. Export-Import Bank. Desch also declined to disclose details of the Coface guarantee beyond saying it was “very attractive” and stretches over 15 years.

In its June 2 announcement, Iridium said its Iridium Next constellation would cost about $2.9 billion to build, launch and insure. Thales Alenia Space’s contract is for 81 Iridium Next satellites, 72 of which will be launched into the same 780-kilometer orbit as the current constellation. The nine others — which before the Coface negotiations had not been in Iridium’s plans — will be stored on the ground as spares.

Iridium’s current financial scenario leaves $800 million to perform upgrades to Iridium’s ground infrastructure and to launch and insure the 72 satellites, each weighing about 800 kilograms. A first launch is tentatively scheduled for early 2015.

In a June 2 presentation in New York, Desch said the full constellation would be in orbit by late 2017.

Iridium has been in negotiations with startup launch services provider Space Exploration Technologies (SpaceX) of Hawthorne, Calif. At the moment, SpaceX appears to be the only company in the United States, Europe or Russia willing to sell rockets at a price level consistent with Iridium’s budget.

Under current U.S. technology export policy, Iridium would not be permitted to launch its satellites on Chinese or Indian rockets.

Desch said Iridium has several options for launching the constellation.

Iridium said the Coface loan guarantee covers 95 percent of a $1.8 billion credit facility being made available to the company. The company said the Coface backing “is not conditioned on Iridium raising any further debt or equity financing.” Desch said the Coface-backed package, now being syndicated by a group of banks including Societe Generale of France, covered a 15-year period at a fixed interest rate.