PARIS – Satellite fleet operator Sky Perfect JSat of Japan on Aug. 4 sharply reduced its forecast for satellite-related revenue in the coming year following a delay of at least a year in the launch of a Japanese military communications satellite.

The satellite, called DSN-1 for its military X-band payload and Superbird-8 for its commercial telecommunications mission, was damaged en route to Europe’s Guiana Space Center in South America in June and will require a year or more of repair and retesting.

Sky Perfect JSat owns 65 percent of DSN Corp., a consortium that financed the construction and launch of the DSN-1 and DSN-2 payloads and is scheduled to receive annual payments from the Japan Self-Defense Forces during through the satellites’ orbital lives, to 2031. DSN-2 is scheduled for launch late this year or early in 2017 aboard a Japanese H2-A rocket.

Managed as a Private Finance Initiative, the DSN program places satellite construction, launch and performance risks on the shoulders of the private-sector consortium, with the military customer payment depending on satellite availability. The arrangement is similar to the British Ministry of Defence’s agreement with Airbus Defence and Space for the Skynet 5 fleet of satellites.

Satellite delay causes plunge in revenue forecast

The delay will be costly for Sky Perfect JSat. In an investor presentation on the company’s financial results for the three months ending June 30, the company said its Space and Satellite division was not expected to report revenue of no more than 86.36 billion Japanese yen ($849 million) for the year ending March 31, 2017. That is a 23 percent decline from the forecast of 112.8 billion yen given in May, before the DSN-1/Superbird-8 issue had occurred.

The company did not specify whether the shortfall was entirely due to the DSN-1 issue, or whether the company had been counting on selling DSN X-band capacity to serve not only Japan but also other friendly governments – a feature that has added to the profitability to Airbus of the Skynet 5 contract.

Sky Perfect JSat has scheduled to launch of its JCSat-16 satellite, which like Superbird-B2 carries a mixed Ku-/Ka-band payload, for Aug. 14 aboard a SpaceX Falcon 9 rocket from Cape Canaveral Air Force Station, Florida. Designed as an in-orbit spare, it will be positioned at Superbird-B2’s orbital slot at 162 degrees east.

Notwithstanding the DSN problem, Sky Perfect JSat said it is nonetheless positioning itself to capture the expected growing Japanese government business in the coming years, an expectation that was encouraged by recent statements of a high-ranking Japanese defense official.

Entering the industrial-drone business

The company also announced that it had acquired, through one of its subsidiaries, a manufacturer of industrial drones.

The purchase by Satellite Networks Inc. of drone builder enRoute Co. Ltd. is apparently the first major entry into the drone market by a commercial satellite operator. Satellite Networks will own 66.7% of enRoute once the acquisition closes.

For the three months ending June 30, Sky Perfect JSat reported Space and Satellite business revenue of 12.6 billion yen, down 5 percent from the same period a year ago. Operating income, at 4.85 billion yen, was down 2.7 percent.

The company cited reduced business from overseas customers as the cause of most of the revenue drop. Offsetting this was an increase in revenue from maritime broadband services.

Modifications to Japanese law have opened new space revenue markets for Japanese companies, both domestically and internationally.

Japanese Defense Ministry moving on space situational awareness

Military reconnaissance, communication and navigation satellites have been the most visible examples, but Japan is also preparing a space situational awareness (SSA) system, according to Atsuo Suzuki, deputy director-general in the Japanese Defense Ministry’s bureau of defense policies.

In a June 6 address to a conference in Prague, Czech Republic, organized by the Secure World Foundation and the Prague Securities Studies Institute, Suzuki said that Japan’s growing reliance on space assets makes SSA “a basic prerequisite” for the nation’s defense.

The defense ministry has now begun assessing alternative architectures – including radar telescopes — for a future SSA system that should be in service by the early 2020s, he said. Construction should begin by early 2018.

Japan already has a missile-defense radar capable of tracking ballistic missiles flying over its territory – because “we have very exciting neighbors,” he said — and this capacity will be part of the SSA network.

Suzuki said the X-band communications satellites will be the first telecommunications spacecraft owned by Japan’s military, which in the past has leased capacity on commercial satellites. He said a third X-band is planned.

Peter B. de Selding was the Paris bureau chief for SpaceNews.