Spanish Firm Orders Small Imaging Satellite Despite Lack of Anchor Customers

VALENCIA, Spain — A small Spanish company has purchased an Earth observation satellite from Surrey Satellite Technology Ltd. (SSTL) in what is perhaps the world’s first private-sector investment of its kind.

Deimos Space SL of Madrid said it has no anchor tenant for its satellite, and no promises of any kind from future government or private-sector customers that they will purchase any satellite data.

Despite this, Managing Director Miguel Bello Mora said the company is spending 30 million euros ($38 million) in the next five years to build an Earth observation business essentially from scratch.

The company announced Oct. 2 that it had purchased a satellite from SSTL that will be launched in 2008 and will join the SSTL-managed Disaster Monitoring Constellation of imaging satellites, which already has five satellites that are operated in orbit by government and industrial groups in Algeria, China, Nigeria, Turkey and Britain.

By purchasing its satellite, Deimos will have immediate access to the constellation’s data at favorable prices and spend the next two years developing its business using this data while waiting for its own spacecraft.

In an Oct. 4 interview here during the 57th International Astronautical Congress, Mora agreed that his company is “taking a risk. We believe in the market, and we were able to persuade our board of directors that this is worth doing.”

Elsewhere in Europe, as well as in the United States, China and several other nations, companies have financed all or most of their observation satellites. But unlike Deimos, they have had government assistance either in the satellite or ground infrastructure financing, or through a guaranteed market, or both.

“We are taking the next step, and we are keeping costs down by purchasing from SSTL,” Mora said. “We think the risk/reward ratio is attractive.”

The Deimos-1 satellite will have a ground resolution of 22 meters, compared to 32 meters for several other satellites in the constellation, and the same 600-kilometer swath width as the other spacecraft.

Sir Martin Sweeting, SSTL’s chief executive, said in an Oct. 4 interview that agricultural and other markets have indicated that a 22-meter resolution has more appeal.

“Users say they want us to keep the 600-kilometer swath, but a 22-meter resolution turns out to be better for many applications,” Sir Martin said. “We expect Deimos will have a large internal Spanish market for its data.”

Mora and Ismael Lopez Jimenez, Demos Space’s head of ground segment systems, said joining SSTL’s constellation means they can offer users a higher revisit time — the period between two satellite overflights — by using other spacecraft when needed because of poor weather conditions when the Deimos-1 satellite makes its pass.

The SSTL Disaster Monitoring Constellation guarantees each participating organization access to most of the imagery of its satellite, with the remaining available capacity used to barter with other constellation partners, or to sell commercially through DMC International Imaging Ltd., a company created for the purpose.

Sir Martin said that every six months an accounting is made to determine which satellite has been used, and how much, and a financial accounting is made to reflect that.

Deimos is partly owned by its employees, with a majority of its equity owned by Elecnor Group, a diversified energy and telecommunications group.

Jimenez said that in performing its market assessment before the SSTL contract, it concluded that larger Earth observation businesses in Europe are moving to high-resolution satellites, leaving a market opening.

Jimenez said the European Space Agency has a planned satellite, called Sentinel-2, which will overlap much of Deimos-1’s capabilities. But Sentinel-2 will not be in service for five years.

“We want to take advantage of this gap to establish ourselves in the market,” Jimenez said. “The agricultural people say they need fresh imaging products every three days, and what we are doing with Surrey will allow us to meet this demand. Our forecast is that we will reach cash-flow break-even in four years.”