Iridium Communications has selected Thales Alenia Space to construct its second generation satellite constellation, Iridium NEXT.
To partially fund the estimated US$2.9bn cost of constructing the constellation, Iridium has secured a Coface-backed…
Iridium Communications has selected Thales Alenia Space to construct its second generation satellite constellation, Iridium NEXT.
To partially fund the estimated US$2.9bn cost of constructing the constellation, Iridium has secured a Coface-backed US$1.8bn debt facility that is expected to be completed this summer. As with its support for Globalstar’s second generation constellation, the French export credit agency will guarantee 95% of the credit facility, which is predominantly being syndicated by French and international banks. However, unlike the Globalstar deal, the Coface guarantee commitment is not conditioned on Iridium raising any further debt or equity financing.
Goldman Sachs, Societe Generale and Hawkpoint continue to advise Iridium on the financing.
Thales beat off competition from Lockheed Martin for the contract, with both vendors seeking to offer export credit agency backing to help Iridium secure a financing package to partially fund the project.
Under the terms of the fixed price “Full Scale System Development Contract”, Thales will construct 66 operational satellites, 6 in-orbit spares and nine ground spares. The NEXT constellation will be designed to host secondary payloads with Iridium currently in discussions with a number of potential candidates.
The two companies have already entered into an Authorisation to Proceed (ATP), which allows Thales Alenia Space to commence work immediately on the development of satellites prior to completion of the financing, with the plan to commence the launch of the first satellites during the first quarter of 2015. Iridium has agreed to pay Thales US$18.8m plus E27.3m (US$33.6m) for the ATP through to August 1, with the ATP renewable for an additional three month period.
Iridium anticipates that the total cost of Iridium NEXT including all costs associated with development, manufacture and launch of the constellation will be approximately US$2.9bn, slightly higher than its previous estimates of US$2.7bn. Iridium has yet to contract a launch provider or secure launch insurance for the new constellation.
Matt Desch, CEO of Iridium said: “We are very pleased with the completion of our comprehensive vendor selection process. We have a great partner in Thales Alenia Space, a world leader in satellite systems, who has developed a sophisticated satellite constellation that will allow us to seamlessly transition to an even more powerful network in the future.
“In addition, the Coface guarantee enables Iridium to secure attractive and flexible low cost financing for the project. Based on the amount of this guarantee, we expect Iridium NEXT to be fully funded when the financing is finalised this summer. This is a critical step in maintaining our customers’ and partners’ confidence that Iridium will keep delivering innovative products and services globally through the coming decades.”
Completes patent purchase
In order for both Iridium and Thales to push ahead with the project, a series of patents connected to the original constellation were required. On June 22, Intellectual Ventures, a US-based patent investment company, announced that it had sold a “significant patent portfolio describing hundreds of inventions related to satellites communication systems” to Thales.
The acquisition subsequently gives Thales access to the intellectual property rights required to build Iridium NEXT, while Iridium receives a license to certain patents that are needed to operate the system.
The majority of these patents were created by Motorola engineers during the original design of the Iridium 66 satellite LEO constellation. When the original incarnation of Iridium entered Chapter 11 in 1999, Motorola retained the patents for the system. However, the communications equipment vendor subsequently sold them to Intellectual Ventures in 2008.
The patent investment company stated that additional patent rights from other R&D programs were also included in the sale to Thales.
Iridium expands to South Africa
Iridium has announced plans to expand into South Africa. The new entity, Iridium South Africa, is licensed to operate, provide and sell mobile satellite services in the country.
Among Iridium’s initial customers will be the South African government, which plans to provide backup communications in urban and rural areas and in emergency situations.
The South African venture follows hot on the heels of Iridium’s securing approval from the Russian Government in May to enter the Russian market. Prior to this, Iridium sold its services in Russia via a collaborative agreement with Khrunichev Space Centre. Khrunichev owns an Iridium gateway and discussions are underway around gateway modernisation and operations.
