Spacecom Satellite Communications Ltd. (TASE:SCC) notified the Tel Aviv Stock Exchange this morning that it had learned from a government source that the State of Israel intends to buy a new communications satellite from Israel Aerospace Industries (IAI). The new satellite will be positioned at 4°W, in accordance with the state's needs. This represents a serious blow to Spacecom, after it announced a month ago that it would buy its planned Amos 8 satellite from US company Loral, and not from IAI.
A battle ensued between Spacecom and IAI over the future of satellite communications in Israel. IAI expressed the fear that Spacecom's decision to buy a satellite from a foreign company would adversely affect the future of its communications satellites business. Over the past few weeks, government officials involved in discussions on the situation said that the government might contract directly with IAI for procurement of a communications satellite, and Spacecom's announcement today indicates that this is what in fact has happened.
In a recent hearing on the matter in the Knesset, government officials made clear that if the state were to buy a satellite from IAI, it would make use of the orbital position that up to now had been promised to Spacecom. The position is worth tens of millions of dollars.
In recent weeks, sources close to Spacecom said that in the past the company had ordered four satellites from IAI, and that the decision to buy Amos 8 from the US company was made because of time constraints, as IAI was unable to meet the short timetable for supplying the satellite.
Today's news is a further blow to Spacecom, after its Amos 6 satellite was destroyed eighteen months ago when the SpaceX Falcon 9 launcher on which it was mounted blew up on the launch pad. It puts in doubt the company's plan to raise $215 million in an offering of shares and debt to finance the Amos 8 satellite. The Israeli government is one of its main customers. A source close to Spacecom said recently, "The state is one of Spacecom's main customers and will continue to be so. All the threats directed at Spacecom are intended to bring it to the negotiating table to make a deal with IAI. In the worst case, should the state decide that it is not a customer of Spacecom, there is no doubt that Spacecom will find other customers to take its place."
Spacecom's share price fell 3.74% today.
Published by Globes [online], Israel business news - www.globes-online.com - on April 30, 2018
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