Spacecom on Verge of Ordering Large Ka-band Satellite

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PARIS — Satellite fleet operator Spacecom of Israel, whose planned expansion beyond the Middle East and Europe is starting with the Africa-centered Amos 5 spacecraft that began commercial service Jan. 25, expects to order a large Amos 6 satellite equipped with Ka-band spot beams in addition to C- and Ku-band transponders within weeks, a Spacecom official said Jan. 25.

Tel Aviv-based Spacecom has been discussing Amos 6 for nearly two years but did not issue a formal request for proposals to prospective manufacturers until last summer. A request for final bids is being sent out in the coming days, with a decision on the builder to be made before April, Spacecom Marketing Vice President Gil Ilany said in an interview.

Spacecom operates the Amos 2 and Amos 3 satellites at 4 degrees west. The relatively small spacecraft the two combined have 48 transponders were launched in 2003 and 2008, respectively, and are more than 90 percent full.

Amos 5, built by ISS Reshetnev of Krasnoyarsk, Russia, with a payload provided by Thales Alenia Space of France and Italy, was launched in December as one of two passengers aboard a Russian Proton rocket. The satellite carries a total of 68 transponders in C- and Ku-band, and will open a new orbital slot for Spacecom at 17 degrees east.

In a Jan. 25 statement on the satellite’s start of commercial service, Spacecom Chief Executive David Pollack said Amos 5 ushers Spacecom “into a new era, further turning us into a multi-regional satellite operator.”

Amos 5 completed its in-orbit checkout a week earlier than planned. Ilany said the satellite is operating as designed and will offer substantial revenue growth to Spacecom. Amos 5 was 55 percent filled with customer contracts before launch. Ilany declined to speculate on what the fill rate will be at the end of the year, but said Spacecom views Africa as a market that is still growing rapidly.

Several satellite operators, notably Intelsat of Washington and Luxembourg, and SES of Luxembourg have said the arrival of massive fiber capacity on the African coastline has cut into some satellite demand, even if the region presents solid growth prospects in the medium term.

Both companies have said they expect what may be an overcapacity of satellites over Africa to stabilize as demand in Africa’s interior grows and absorbs the existing satellite bandwidth now pointed at African markets.

Ilany said the arrival of cable will have an effect on satellite demand in some regions, but that its broader effect will be to stimulate the appetite of landlocked regions for the same broadband and other telecommunications services now available on the coasts.

“Take a nation like DRC [Democratic Republic of Congo],” Ilany said. “They have a relatively small coastline where the cable arrives, but it will not be long before residents of the capital and other cities will want what fiber can provide. Satellite is the most efficient way of providing this.”

Spacecom has a full-time staff of 12 salespeople working the African market and expects that prevailing market prices will remain firm, as a whole, in sub-Saharan Africa as growth in cellular backhaul and what he called “DTT backhaul,” or satellite carriage of digital terrestrial television to rural regions, more than compensates for a demand dip on the coasts.

Amos 5 was one of the first non-Russian commercial contracts won by Reshetnev, with a contract price of $157 million including the satellite’s construction and launch. At the time it was considered a remarkably good deal for Spacecom.

The Russian manufacturer was several months late in delivering the satellite, a delay that caused Spacecom to scramble to meet African demand by leasing an aging satellite AsiaSat 2 from AsiaSat of Hong Kong in February 2010. Named Amos 5i and placed at 17 degrees east to await Amos 5, the older satellite was running low on fuel and could not last long enough to provide a smooth customer handoff to Amos 5.

Spacecom said in a Jan. 25 filing with the Tel Aviv Stock Exchange that it has reduced its payments to ISS Reshetnev by $13.5 million to compensate for the satellite’s late arrival.

In a Jan. 23 submission to the stock exchange, Spacecom said an arbitration panel issued a split decision in its disagreement with AsiaSat on compensation for the AsiaSat 2/Amos 5i experience. The panel ruled that Spacecom must pay AsiaSat $10 million, but AsiaSat’s demand for a share of the Amos 5 revenue for two years was rejected.

Spacecom’s next launch is the Amos 4 satellite under construction by Israel Aerospace Industries (IAI), with the payload provided by Thales Alenia Space.

Amos 4’s launch has slipped from 2012 to 2013. Spacecom has signed a launch reservation with Space Exploration Technologies (SpaceX) of Hawthorne, Calif., for a launch aboard a geostationary-optimized Falcon 9 rocket that is still in development. Ilany said Spacecom is reviewing its options for the launch and has not decided on a launch service provider.

Amos 4 will operate at 65 degrees east and expand Spacecom’s operations further eastward.

Ilany said an Indian beam in Ku-band will offer capacity in the Indian Ocean region, including Pakistan. The beam will be steerable to shift over Southeast Asia depending on how demand develops, he said. A second Ku-band beam will cover 80 percent of the Russian population in addition to Kazakhstan. Amos 4 will carry 24 transponders.

Amos 6, which may include the financial backing of the U.S. or French export-credit agencies, will be bigger than Amos 2, 3 and 4 combined, carrying a total of around 80 transponders in Ku- and Ka-band.

Amos 6, whose launch is tentatively scheduled for 2014, will be co-located with Amos 2 and Amos 3 at 4 degrees west, and ultimately will replace Amos 2 upon its retirement in 2017.

“Within three years we will be a company with five satellites at three orbital slots,” Ilany said.

Spacecom, which reported $77 million in revenue in 2010 and an EBITDA, or earnings before interest, taxes, depreciation and amortization, equivalent to 62 percent of revenue, posted revenue of $62 million for the nine months ending Sept. 30, with an EBITDA of 56.5 percent of revenue, the company said in a Jan. 17 stock market filing.