The magic touch of French satellite finance
It was a stunning announcement. Eighty-one satellites are to be built by the Franco-Italian company Thales Alenia Space (TAS) for Iridium's next-generation network.
The European manufacturer had beaten Lockheed Martin of the US to one of the great industry prizes of recent years. TAS will get some $2.1bn for their part in the $2.9bn project which probably counts as the world's biggest commercial space venture right now.
The American Iridium company currently operates 66 spacecraft in a low-Earth orbit, linking sat phones across the entire globe. The system also provides data links as well.
Not everyone has reason to use a satellite phone but Iridium's 360,000 subscribers clearly appreciate the service and their calls deliver very healthy revenues to Iridium.
The announcement was all the more remarkable considering Iridium's history. The original company you will remember went belly-up soon after going live, filing for Chapter 11 Bankruptcy in 1999.
It was then bought out of that predicament the following year by investors who paid a fraction of the cost of setting up the present constellation of satellites.
It's been a big turnaround.
Thales promises the satellites it provides for Iridium's Next network will offer an enhanced service while being fully compatible with the old system.
TAS says the first of the 800kg spacecraft should be ready for launch from 2015.
What was really striking, however, was the role played yet again by the French export credit guarantee organisation, Coface, in cementing Wednesday's big deal.
The Compagnie Francaise d'Assurance pour le Commerce Exterieur underwrites risk and has been particularly active in supporting the French satellite manufacturing sector.
Its commitment to projects like Iridium Next allows those projects to secure loans at very favourable rates. In what are tough economic times, Coface support has facilitated ventures that might otherwise not have been able to get financing.
TAS itself won a Coface-supported deal to build 24 satellites for another US sat-phone service provider, Globalstar. Coface backing was also important in Thales winning the contract to build 16 broadband satellites for start-up O3b which has its headquarters in the Channel Islands.
How Lockheed Martin, the losing bidder in the Iridium Next project, must be feeling is anyone's guess.
As a US manufacturer seeking work from an American company, Lockheed Martin would not have been able to bring export credit guarantees to the party. Obviously. It would not have been exporting.
So did Lockheed really stand a chance in its run-off with Thales? Is Coface's support for French exporters acting to distort the market? Questions I put to Matt Desch, CEO of Iridium. His response:
"This is a global market space. There is a lot of work here in this contract that American companies will be doing because Thales has, I think, selected a fantastic team of potential subcontractors which includes almost 40% of the business from North America. So I don't think this is anything but really good news for the space industry as a whole and, frankly, really good news for all those people who're going to be involved in this [project]."
Thales has certainly won friends in making sure a US workforce is heavily involved. Key partners will be Ball Aerospace and Boeing. Indeed, Ball will probably be involved in the final assembly of the spacecraft.
But there ought to be some wide eyes in other countries that want to support their space industries. It is clear they need to make sure their national manufacturers also have full access to all the modern financial tools being deployed so productively right now by the French.
The British space industry is jumping up and down on this issue, too. Thumb through the recent Space Innovation and Growth Strategy document, which sets out a 20-year vision for UK industry. Go to Recommendation four. It reads:
"The UK government should provide more capital guarantees and/or anchor tenancy agreements to allow UK-based operators to raise the necessary finance to buy satellites and fund launches so that they can enter new space-enabled service markets and grow their businesses. Although this need is not unique to the space sector, we ask government to note the high capital costs involved in the procurement and launch of individual satellites and the need for the UK to be first to market to exploit a growing export market."
We discussed in my last post the new UK Coalition's desire to back UK space, and the problems it might encounter as a result of the public deficit.
But the point about all of this is that support is not limited just to spending money. It is also about creating the right financial environment in which industry can thrive; and right now Coface is giving the French satellite manufacturers a huge leg up.
I’m 
~RS~q~RS~~RS~z~RS~06~RS~)
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Coface is just like our ECGD organisation, but because they are French you seem to think that they are fair game.
The one thing that the Iridium 'business' shows us is that bankruptcy is a good way to get too high historic costs and the overvalued assets purchased with them back into productive use at a more sustainable price.
In essence there is a market for a global phone system but the set up costs were too high, rather like cable TV in the UK.
By the way why isn't there a European version of Coface and the ECGD?
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Thanks Jonathan, a great story as always. Your blog always makes an Al-Desko lunch that bit more enjoyable.
Can you tell us anything about the design of the new spacecraft? Specifically will they still have the giant flat antennas that produce those amazing flares?
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What's all the excitement? What have I missed?
Iridium Communications Inc. has announced its comprehensive plan for funding, building and deploying its next-generation satellite constellation, “Iridium NEXT”.
Specifically, the Company announced the execution of a fixed price contract with Thales Alenia Space, a joint company between Thales (67%) and Finmeccanica (33%), for the design and construction of satellites FOR (not themsleves, not for Europe but for) the Iridium NEXT constellation.
The Thales Group is a French electronics company delivering information systems and services for the Aerospace, Defense, and Security markets. The headquarters are in Neuilly-sur-Seine (in the suburbs of Paris). It is now partially state-owned by the French State, and has operations in more than 50 countries. It has 68,000 employees and generated over €12.3 billion in revenues in 2007.
In addition, the company announced that Coface, the French export credit agency, has issued, for the account of the French State, a "Promise of Guarantee" which commits to cover 95% of the $1.8 billion credit facility for the project.
The financing to be covered by the Coface guarantee is being syndicated through French and other major international banks and financial institutions and is expected to be completed this summer.
This is a great comeback: The Iridium Network was put into orbit in the late 1990s but soon ran into financial difficulties and went into bankruptcy owing to the limited market for a global mobile network. The company was bought for a fraction of its original price and now runs as a private operation that contracts to a variety of business and military organisations.
Iridium Communications Inc. is a publicly traded company headquartered in McLean,VA. Iridium's mobile voice and data communications solutions, for a wide variety of industries, are supported by the only truly global communications network, with coverage of the entire Earth, including oceans, airways and Polar Regions. Iridium's constellation - the world's largest commercial satellite constellation - consists of 66 low-earth orbiting (LEO), cross-linked satellites operating as a fully meshed network and supported by multiple in-orbit spares. The Iridium constellation architecture ensures high reliability and low-latency. Iridium is constantly finding new ways to expand the possible, including our next-generation constellation, Iridium NEXT, which will bring enhanced and entirely new services and capabilities to our customers, and is anticipated to begin launching in 2015.
Iridium provides service to subscribers from the US Department of Defense, as well as other civil and government agencies around the world. Iridium sells its products, solutions and services through a network of service providers and value-added dealers.
Company: Iridium Communications Inc.
Corporate Headquarters: McLean, Virginia, USA
Operations Centers: Tempe, Arizona and Leesburg, Virginia, USA
Workforce: Approximately 170 employees worldwide
So this appears to me to be what's happening here:
Thales Alenia Space will build the next generation of satellites;
for Iridium Next, and the French will guarantee the spending, eliminating risk.
Afterwards, the US Defense Dept & Intelligence Department (thanks to these wonderful Iridium Next, new generation satellites) will be better enabled to watch...watch every move made by every persons anywhere in the world that it wants to "catch" in so-called illegal activity and/or blow the heck out of.
Yes, indeed, this is exciting!
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@TheyCallMeTheWonderer: It's an excellent question and I was wondering exactly the same thing! TAS tell me the flares will end with the Next constellation. The antenna configuration - which gives rise to the flashes on the present satellites - is completely different on the new spacecraft. So make the most of them now. A few months back I saw two glorious flares. I'm told Matt Desch has an app on his iPhone that tells him when and where to look. For those of us without iPhones, there is always the ever excellent Heavens Above website.
As regards the spec on the new sats, TAS sent me the following:
· Thales Alenia Space is prime contractor, in charge of engineering, systems integration and supply of a space segment comprising 72 operational satellites + 9 spares (the customer supplies the launchers and modifications to ground facilities)
· Options for 3 to 6 additional satellites per year after 2016
· Flexible platform, based on our constellation product line
· Sophisticated active antenna: L-band multibeam transmission/reception
· Onboard processing for call routing (calls do not go via the ground)
· Intersatellite links
· 2-axis solar panels
· Orbit: 780 km
· Weight: 796 kg
· Electrical power: 2kW
I will write more about the new satellites in the coming weeks because they are going to carry piggy-bag payloads. Many are likely to be Earth observation instruments. It is a very interesting proposition.
And finally: I've had a number of people ask me how Iridium plans to deal with the end-of-life de-orbit/debris mitigation issue. The plan currently is to push the old satellites lower in the sky and then let them come back to Earth.
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Off topic but the SpaceX Falcon 9 lifted off at 7:45pm our time and seems to have been a complete success!
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