Spacecom Satellite Communications Ltd. (TASE:SCC) has written off almost its entire investment in its Amos 5i communication satellite. Last week, the company said that it will record a $12 million loss on the interim satellite that it bought because its fuel will run out sooner than expected.
Spacecom was due to pay Asia Satellite Telecommunications Company (HKSE: 1135) $45 million for the satellite, which was supposed to provide services until Spacecom's Amos 5 satellite is launched in June 2011. Payment was to be made in installments, based on the Amos 5i's performance and milestones, the most important of which was continuous operation until the Amos 5 launch.
Now that the Amos 5i's fuel is calculated to run out within months, the cost of the satellite will be the $20 million that Spacecom has already paid Asia Satellite. Out of this sum, Spacecom recorded depreciation of $4 million in the first quarter and $14 million in the second quarter. The company recorded a loss of $8.3 million on reduction in value, and recorded the rest as depreciation. To sum up, Spacecom has written off $18 million of its $20 million investment in the Amos 5i.
Spacecom posted a net loss of $7.2 million ($0.33 per share) for the second quarter, almost double its net loss of $4 million for the corresponding quarter of 2009. Revenue rose to $20.1 million for the second quarter from $18 million for the corresponding quarter.
Shaul Elovitch-owned Eurocom Group owns 66% of Spacecom. Spacecom's share price fell 0.8% to NIS 68.75.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010