Satellite broadband operator O3b Networks has secured US$460m in a mix of equity and debt financing to grow its MEO constellation from 12 to 20 spacecraft. Thales Alenia Space is building the Ka-band satellites, and said they will be integrated into the existing constellation in early 2018.
Satellite broadband operator O3b Networks has secured US$460m in incremental financing to grow its MEO constellation from 12 to 20 spacecraft.
The financing is a mix of equity from existing shareholders and debt from relationship banks supported by French export credit agency Coface, SatelliteFinance understands.
O3b picked France and Italy-based Thales Alenia Space last week to once again build its Ka-band satellites. The manufacturer said they will be launched and integrated into the existing constellation in early 2018.
As with the others, the spacecraft will likely be launched in batches of four on Russian Soyuz rockets through France’s Arianespace.
O3b’s MEO constellation, operating about four times closer to the Earth than GEO satellites, was designed from the outset to be scalable in tune with market demand. Additional satellites will provide extra capacity for new customers, while improving the reliability and service availability of the company’s high speed, low latency connectivity products for existing subscribers. The current system is able to provide over 100 Gbps of capacity.
The initial batch of eight satellites was funded by a US$1.2bn debt/equity facility back in 2010. Four of those suffered an onboard anomaly after Arianespace launched them in June 2013, resulting in O3b netting around US$320m from insurers.
The group followed up its initial batch by ordering just four extra satellites in 2011, using a US$137m facility split between a US$52m private funding round and an US$85m expansion to an existing US$510m Coface-backed senior debt facility.
Announcing its latest satellite order on 10 December 2015, O3b said its decision to buy eight was driven by growing demand in the energy and government markets.
The group has brought 40 customers online since launching commercial services in September 2014, and it said more than 50% of these have already upgraded their service commitments.
Steve Collar, O3b’s CEO, said: “Our constellation is highly scalable and can be grown in direct response to market demand. In only a little over a year from our full commercial launch, we can already see the need for substantially more capacity in orbit to serve our customers.”
The group had a reported US$530m backlog at the end of June. Satellite fleet operator SES (EPA:SESG), which owned about 47% of O3b before its latest financing, has forecasted it to post about US$100m in annualised sales by the end of this year.
SES is understood to have participated in the equity part of the latest fundraising, but has indicated in the past that it would not raise its stake beyond 50% until O3b is EBITDA break-even – expected to be reached early next year.
Once SES takes a majority, current agreements require it to make an offer to take over the group within 18 months.
O3b’s other shareholders include Google, Liberty Global, HSBC, Northbridge Venture Partners, Allen & Company, Development Bank of Southern Africa, Sofina, Satya Capital and Luxempart.
The latest customers to be announced by the Jersey-based company include US-based oil and gas communication services provider RigNet, Ecuador’s largest broadband provider CNT EP, and Colombian ISP Skynet.
UK-based Portland Advisers, a specialist in ECA-backed credit facilities, is understood to have been hired once again for financial advice.
