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IRIS2 in BEFO

August 13, 2024

Europe’s plan for a highly-secure orbital constellation, called IRIS2 (Infrastructure for Resilience, Interconnectivity and Security by Satellite) is widely accepted to be in trouble. Two key members of the winning consortium (Airbus Space & Defence and Thales Alenia Space) have already stepped down. The remaining members of the SpaceRISE consortium, formed specifically to bid for IRIS2, are submitting their ‘Best & Final Offer’ for their participation in the private/public project.

The European Commission (EC) says that it will decide in September on the final shape of the bid, and how it will be financed. But there are problems. Eutelsat’s CEO Eve Berneke, speaking to analysts during her August 9th financial report, admitted that there were various options under consideration with the primary objective being to trim costs. The various operational members of what’s left of the consortium (SES, Eutelsat and Hispasat) have some valuable options already in their orbital inventory.

SES, as well as a world-circling fleet of geostationary satellites (and in the process of buying Intelsat to add to the fleet), also owns a mini-constellation of mid-Earth orbiters called mPOWER. The problem for SES is that (1) it still has to cough up $3.1 billion to buy Intelsat and (2) still has to pay Boeing for the remaining unlaunched mPOWER satellites.

Eutelsat is extremely cash-strapped. It ‘merged’ itself with low Earth orbiting fleet OneWeb back in September 2023. It has to finance OneWeb operationally including investing in dozens of ‘Gateway’ access points around the planet in order to make OneWeb work. Indeed, it is raising around €790 million by selling off all of its wholly-owned teleports and forming a new business where it will only own 20 per cent of the business.

Eutelsat has suspended dividend payments to shareholders while it accumulates cash in order to buy a second generation fleet of OneWeb satellites. However, its own global geostationary satellites plus the 600-craft OneWeb fleet are powerful assets. Nevertheless, Eutelsat is in need of cash. It is very highly geared as far as its borrowing and debt are concerned, hence the desire to sell off its teleports.

Hispasat, while a more modest operation, has its fleet of satellites with a powerful presence in the Latino markets as well as covering Europe. However, with these available assets it is quite reasonable for the consortium members to ask the EC ‘why do we need an all-new IRIS2 scheme?’

That was, by implication, the question raised by Berneke in her comments to analysts. Industry gossip is that the original SpaceRISE budget was pitched at around €12 billion. While not being unaffordable, it was a much larger amount than initially envisioned. The European Space Agency is prepared to pitch in with cash and the French government is said to be favourably inclined to help out. But Germany is not in favour.

But there is one German-based operation that would love to see it satellites – also low Earth orbiting – and with highly secure laser communications in the shape of Rivada Space Networks. They have the first batch of 300 satellites under construction now, and they’d start to launch in this coming winter and be in service during 2026.

Eutelsat’s Berneke told analysts that there remained one possibility that IRIS2 could become a hosted-payload scheme to place secure communications technology on the partner’s existing assets. That would include OneWeb’s ‘second generation’ craft as well as SES’s expanding O3b mPOWER fleet.

Berneke said: “There has been speculation about whether a hosted payload could be an alternative. Right now, we are still working on the original tender offering and structure with the Commission. But there are lots of alternatives. What’s important is that we get to a point where we have European sovereign capacity. To me that is the most important objective of the IRIS2 discussions.”

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