GovSat sells 20% of defence satellite capacity

The industry event was hosted at the Luxembourg Congrès in Kirchberg on 14 February 2019 Nader Ghavami

The industry event was hosted at the Luxembourg Congrès in Kirchberg on 14 February 2019 Nader Ghavami

The firm reported on Thursday that 20% of the capacity of the satellite manufactured by Orbital ATK has been sold or is reserved.

A year ago, CEO Patrick Biewer had announced a range of 15 to 25% as an indicator of success for the first year. “Giving a precise figure is difficult,” he explained in his speech at a meeting of around 500 satellite and defence operators in Luxembourg on Thursday.

He added: “Because these are fairly long negotiations, which can last up to six months and go through different phases. Our operating costs are largely covered, and that's the best news.”

A first report will be published in the spring, and further growth is expected in 2019.

“In general, a satellite does not market 100%, but about 80% of its total capacity. Because some contracts start when others end. It takes six to seven years to do that,” he said.

Key customers

The Luxembourg State spent €10m to acquire capacity (notably as part of its obligations to NATO). The Belgian Navy, the French Navy and Nato, through its logistics support agency, are also among those customers who prefer to remain discreet.

“Some customers want to acquire satellite capacity, but do not have specific expertise in ground-based technologies or associated services and have started to ask us to sell them as well. This explains our good results in a more unexpected way and makes it possible to imagine developing this sector in Luxembourg. Here, today, there are a few integrators we turn to provide these services that our customers require. Some are beginning to imagine settling in Luxembourg,” Biewer said.

Second satellite

GovSat was created in 2015 between the Luxembourg state and satellite operator SES to provide secure and reliable satellite communication capabilities for both military and civilian purposes and meet growing demands in institutional and defence fields. It launched GovSat-1 on 31 January, 2018. To launch a second satellite would require investment of €200-€250m, Biewer said. One option would be to purchase a second satellite as a back-up for the first to meet growing demand. Biewer, however, said it was too early to speculate on whether they could sell additional capacity.

The context of government satellites has changed: last June, and after more than four years of discussions, the European Union decided to add a GovSatCom component to its space policy (€16 billion in total). Endowed with 250-500m euros according to the outcome of negotiations that began in January, this component aims to "offer" after 2021 a European satellite capacity plan for government needs.

The EU will become the customer of the operators, which it will then sell to the member states or institutions. Will this competition distort the market? “Not necessarily,” said Biewer. “Because the European Union will map out needs. This will therefore create needs and the capabilities that the EU will acquire will not be able to meet all needs. The industry will take over!”