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Spacecom Amos-6 prospects examined

It was time-saving of at least a day in the pre-launch campaign that seemed to have been the reason why Spacecom’s AMOS-6 satellite was sitting on top of its SpaceX Falcon 9 rocket when a conflagration occurred on September 1.

A full and exhaustive study is taking place into the explosion at SpaceX, supervised by the Federal Aviation Commission, to determine what caused the ‘anomaly’ while the rocket was being fueled with a combination of liquid oxygen and kerosene when the fire happened.

It has now emerged that most other rocket launch companies do not place a massively expensive satellite atop the rocket. The rocket, while expensive at about $60 million, is nothing compared to a satellite which might cost upwards of $200-250 million.

SpaceX is hoping to return to full launch mode at Cape Canaveral by November at the latest. It is completing improvements to Launch Pad 38A (the incident happened at Launch Pad 40 which will need repairs). Analysts are suggesting a “maximum 100-day” delay while the experts conduct their examination.

Israel’s Bezek telco said September 5 that the loss of Amos-6 meant that some of its DTH channels, now being carried on Amos-2, would be transferred to Amos-3.

Spacecom, in statement September 5, said it had initiated a plan of action to recover from the loss of Amos-6. “Our program includes, among other measures, exploring the possibility of procuring and launching a replacement satellite. Working quickly and efficiently, management is engaging with current and potential partners to move forward,” said Spacecom, and adding that it would serve all of its current and future financial commitments.

Spacecom CEO David Pollack said that the company would be seeking to source capacity on other satellites, and might lease a satellite and locate the craft to its 4 degrees West orbital slot.

Spacecom is also in dialogue with China’s Beijing Xinwei Group about “amending the current agreement” to reflect the new situation. Reportedly, the deal where the Chinese company was to buy Spacecom for $285 million is not dead, and the Chinese remain engaged and that discussions are on-going

Equity analysts at Berenberg Bank say that although the disaster is “materially negative” for Spacecom (Spacecom’s share price has crashed from about 4333 NIS to 2696 NIS over the past four trading days, and at one point hit 2000 NIS on September 4), the explosion inevitably affected Eutelsat, which had leased some of the Amos-6 capacity for its contract with Facebook.

While Eutelsat will lose revenues of about €5 million this financial year (which ends next June), the 2017-18 loss will be about €15million, and the following year about €25-30 million. Eutelsat has stayed with its overall guidance for the next few years will stay much the same. Berenberg says: “That said, the loss of AMOS-6 revenues does not really materially change the Eutelsat equity story, in our view. We believe the medium-term outlook for Eutelsat is perhaps more attractive than the current share price represents. However, near-term headwinds will give the market little evidence of a turnaround until at least FY18, a backdrop that does not suggest significant outperformance, and this unfortunate news will not be helpful.”

Analysts at Jefferies implied that Eutelsat might even gain from the problem, and directly quoting from Eutelsat’s press release on the Amos-6 problem: “[Eutelsat] remains committed to growing broadband in Africa and will explore other options to serve the needs of key clients ahead of the launch of its own High Throughput African broadband satellite, due in 2019″

Berenberg also looked at SES and Inmarsat’s prospects following the SpaceX problem, saying: “SES and Inmarsat also have SpaceX launches planned for later this year/early next year, and at this point any impact from the explosion on those launches is unknown. However, we would expect there to be a slight delay while investigations are carried out. SES-10 is largely a replacement satellite and is using a ‘flight proven’ re-used rocket – i.e., a slightly different rocket – and being largely a replacement, a delay should not have too material an impact. Similarly, Inmarsat’s S-band satellite, which is planned for launch in H1 next year, will likely use a Falcon Heavy rocket. Therefore, both satellites have potential to not be delayed but if are delayed we do not see a significant impact on the revenues of either company at this stage.”

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