Israel’s Spacecom is on the hunt for partners to launch new satellites to help seal its place as a global operator. SatelliteFinance talks to Omri Arnon, vice president of business development and strategy, to learn more about these expansion…
Israel’s Spacecom is on the hunt for partners to launch new satellites to help seal its place as a global operator. SatelliteFinance talks to Omri Arnon, vice president of business development and strategy, to learn more about these expansion plans.
Jason Rainbow: Where is Spacecom in its journey towards becoming an emerging global satellite operator?
Omri Arnon: We already reach a very large proportion of the Earth’s population with our satellites from 4W to 65E. We can cover from Brazil all the way up to Japan and Australia. Some of the beams are also steerable.
The areas we are covering today are mostly Central and Eastern Europe, the Middle East, Africa and parts of Asia.
AMOS-6, which is scheduled to be launched in early 2016, will expand the coverage for the first time in Europe to Western Europe, where we will have a pan-European beam.
The satellite will also expand our Ka-band coverage over Africa and Europe with an HTS payload that will have 36 beams, mostly over Africa.
JR: What growth potential do you see in Western Europe?
OA: Western Europe is not our main market, and not one we’re going for in a big way. We put a pan-European beam on AMOS-6 initially because our current customers are looking for ways to go from their area to Western Europe.
Since then we have gotten to know the market better and have also found West European customers.
Our Ku-band backlog on AMOS-6 is US$250m and, for all of our satellites, total backlog as of 1 January 2015 was US$737m. In 2014, revenues were US$110m while EBIDTA was US$70m.
JR: AMOS-6 is also fitted with electric propulsion, which is a technology that’s being increasingly adopted by operators around the world. Is that a trend you see continuing for Spacecom specifically?
OA: Electric propulsion provides many benefits, and of course there are a couple of disadvantages. I can’t tell you whether it’s a trend for us, but when we order our next satellite we will definitely consider it.
JR: How does Spacecom plan to expand its business?
OA: Spacecom is working on two different paths for growth. First is organic growth whereby we launch and operate our own satellites. Second are joint venture initiatives with a partner or partners.
Partnerships can be based on orbital locations, capital, know-how, or whatever the partner can contribute. So a potential partner could be an operator or country interested in launching a satellite.
These are the two ways we plan to expand our fleet.
JR: What kind of JVs are you looking for?
OA: In order to carry out a satellite project you need an orbital slot, US$250m-300m in capital, and knowhow – how to design, how to operate a satellite, and how to work with manufacturers. You also need market access.
We have competencies in each of these areas. We view each market as different and will base our partnerships on the various competencies that each potential partner brings to the table.
If we go to a new market, we prefer to have a partner with solid market access. Having a partner depends on many parameters – whether it is an operator, a country, or a company that does not currently own a satellite. For us, these create variations for partnerships, all of which are exciting.
Obviously, we are primarily interested in finding the best market potential for our operations. It is a given that whomever we partner with will be required to invest in the joint venture as well.
JR: Are you currently in any talks?
OA: We are in discussions with a couple of potential partners in Asia and in other areas. We have space assets and are looking for partnerships on these orbital slots.
JR: Has your company looked at Latin America as it considers its expansion plans?
OA: Latin America is one option, but there are other options such as the continents we are covering already.
For example, with AMOS-4, we initially thought all of its capacity would go to Asia.
Spacecom pre-sold much of it, and is currently marketing only three beams. We thought these beams were only going to be in Asia, but as it turns out only one is currently in Asia while another is in Africa. The third one may also go to Asia.
So, we still have a lot of areas in our existing markets to cover.
JR: But, in terms of entering interesting markets that your company is not in already, would Latin America be it?
OA: You know, I thought several years ago that we would be entering Latin America. The problem is that everybody thought the same and now it’s pretty congested. I am not sure how demand versus supply is looking there for the foreseeable future.
It is still very interesting, but I can’t say whether our next satellite is going to be there or not.
JR: Is there any urgency for you to decide where your next satellite will be located?
OA: No, it is not urgent, and if an interesting opportunity comes along then we would go with it as long as we can justify the investment. Our goal is to grow in long term, high demand markets.
