CEO Meir Moalem: The cost of putting our Three Diamonds in orbit was
around $500,000. That’s a disruptive story for new space companies
An Australian-owned, UK-based, Israeli-staffed company is trying to put the funds together to build and launch a network of 200 tiny telecoms satellites.
The company, Sky and Space Global (SAS), wants to provide coverage around the planet’s equatorial belt. The satellites, each around 700-750km above the surface, would act as an orbiting network of cell towers.
“The space industry is transforming. The future is with smaller and smaller satellites,” says CEO Meir Moalem.
SAS already has three test satellites in orbit, built by a Danish company and launched in June by the Indian Space Research Organisation piggybacked on a rocket that was carrying other satellites.
“We call them the Three Diamonds,” says Moalem. They’re operating successfully while SAS promotes the project in order to raise funding for the full constellation.
This month the company announced that it has successfully run tests on the Three Diamonds’ ability to carry voice and data.
Says Moalem: “Today we fulfil our promise to our shareholders, made 18 months ago. This is a great achievement for Sky and Space Global and we are very pleased to be announcing this news and setting a precedent in the satellite communications industry. After months of hard work we are starting to put our vision into practice.”
The company says that this is the first time that a voice call has been facilitated by nano-satellites. The technology will enable low-cost satellite connectivity in remote locations and in emerging markets that have no access to a communications network infrastructure. “We’ll see a lot of eyebrows raised in the coming months,” says Moalem.
To be fair, SAS has already raised eyebrows. The project started, he says, when he met a group of Australian investors looking for opportunities in Israel.
From oil and gas to earth orbit
They introduced Moalem and his colleagues to Burleson Energy, whose former CEO, Andrew Bald, still describes the company on his LinkedIn page as “a junior oil and gas exploration company”.
But not for long. Between March and May 2016 it had changed its business, changed its name to SAS, created and acquired a UK subsidiary of the same name and – on the last day of May – carried out an initial public offering (IPO) on the Australian Securities Exchange (ASX) that raised A$4.5 million – worth around US $3.5 million.
The investors “said we could do an IPO on the ASX on day one”, recalls Moalem. “I wasn’t an expert. I know a lot more now.”
He may not have known about funding, but he has worked in satellites for many years. A former pilot in the Israeli air force, he worked in the country’s space programme to build sensing satellites. “Our satellites travel the wrong way,” he says: “They are the only satellites that are launched westward.” That’s so that Israel doesn’t have to launch its satellites over the heads of its Arab neighbours.
Sadly, Moalem was also project manager on Israel’s first astronaut flight. His colleague Ilan Ramon was lost in the Columbia space shuttle disaster during re-entry in February 2003.
His colleagues as founders of SAS are the CTO, Meidad Pariente, who worked on Israel’s Amos satellite programme, and Yonatan Shrama, with a cybersecurity background.
Indian rocket launches SAS’s three trial satellites in June 2017. Now
the company wants to raise funds for 200 satellites
The money raised in the Australian IPO “allowed us to sign contracts for Three Diamonds – the building of them and the launch”, says Moalem. “The cost of putting our Three Diamonds in orbit was around half a million. That’s a disruptive story for new space companies.”
Moalem relishes the idea of being disruptive. “The traditional space industry still believes nano-satellites are toys for boys,” he smiles. “They say they will fail – and inertia in these companies is very large.”
SAS commissioned a nano-satellite specialist, GomSpace, to build the Three Diamonds. GomSpace is a Swedish-registered company whose operations are concentrated in Aalborg, a city in the northern tip of Denmark that is best known for a powerful alcoholic spirit called Aquavit. GomSpace’s shares are listed on Nasdaq’s European market, First North.
The Three Diamonds side by side after manufacture in Denmark
Each of the Three Diamonds is tiny. “The satellites in our constellation will be bigger, much bigger. But potential customers have come to us to use the Three Diamonds. They are commercial assets.”
Though they are bringing in revenue, he says, their main purpose is to stimulate the next round of funding. “Our entire capex for 200 satellites and for 24/7 services is less than $200 million,” he says.
The timescale is short: he wants to get them into service in the next couple of years. But what is the market? “There are three billion people disconnected from the grid,” says Moalem.
However, SAS will not cover all of these three billion. For a start, from just 750km up, 200 satellites in inclined orbits won’t have a huge range: he reckons on 24-hour coverage between 15° north of the equator and 15° south. “North and south of that, there will be service – but not 24/7,” he says.
Check a map. Between 15° north and 15° south you get all of central America south of the Mexican border – so Mexico is not covered at all – but you get the northern part of South America. In Africa, you cover northern Angola, some of Zambia and all of Tanzania, but none of Zimbabwe. North of the equator, the cluster of coastal west African countries from Sierra Leone to Nigeria are covered, as are Ethiopia and Somalia.
Cross to Asia, and the Indian cities of Bengaluru and Chennai will be served, but Mumbai, Delhi and Kolkata are not. Further east, Malaysia, the Philippines and Indonesia are well within the ±15° coverage belt.
SAS’s Australian investors will just about be able to see their satellites from Darwin, the capital of the Northern Territory, but not from further south.
One fifth of the world population
If you do a quick population estimate, SAS has access to nearly 200 million people in central and South America, 500 million in Africa, 250 million in southern India and 400 million in Asia: perhaps 1.3 billion or so, about 20% of the world’s people. That works out at around $0.15 per head of population, if SAS achieves its $200 million capex target.
SAS will be a wholesale operator, working with local distributors in each region. “We have appointed Sat-Space Africa.” It has landing rights or market knowledge in more than 27 countries, he says. The South American partner is GlobalSat group, based in Florida north of Miami. Elsewhere? “We are working with existing players.” India? “We’re working on it,” he smiles.
The services will be data more than voice, says Moalem. There’ll be an interface between the satellite signals and the end-user’s smartphone. “Compare today’s satellite phone at around $1,500. Ours will be less than $100,” he says. The unit “will be the size of a big smartphone and will act as a hotspot, with seamless handover between satellites”.
His ideal service will be low-bandwidth apps such as text and WhatsApp messages. “The most challenging service is the phone call. You need 4kbps for a reasonable call with good enough quality.” There’ll be on-net services plus gateways to external networks. “The most interesting market is machine-to-machine, because of the very low data rate.”
So what’s the capacity of the satellites? “We get asked that a lot,” says Moalem, side-stepping the question. With the Three Diamonds, “we’ve tested inter-satellite transmission. It’s about two mega symbols per second.” That’s a satellite-industry term that can’t be converted easily to normal terms for data rates, but it’s “around 2Mbps”, he shrugs.
“The next stage will be to get two, five, 10 times as much. Eventually we will be able to provide much better services.” But at the moment, “we’re not planning to provide video. If someone sends a video file it will take them a long time.”
In the longer term, though, “I’m sure that very quickly people will want Facebook and to send videos.” That’s for a possible upgrade strategy. SAS is planning to replace 25% of its satellites every year – another difference from the traditional satellite industry, which thinks in terms of seven, 10 or 15-year life spans.
Why? “How old is your phone?” asks Moalem. “Every few years you replace it with a newer model.” It’ll be the same with SAS’s satellites, each of which will be left with enough residual fuel to hurtle it into the atmosphere to burn up safely. It means SAS will replace its fleet on a four-year cycle – providing opportunity for frequent upgrades in power and capacity.
And Moalem is also thinking about coverage beyond that ±15° equatorial belt. “By 2020 we need to make a decision on whether to expand coverage and if so by how much. It depends on what the market would look like by 2020.” He talks about a step-by-step approach: if a customer needs coverage at 25° north or south of the equator, “we would talk”. But in his long-term plan he is thinking of “a global constellation of 1,000 satellites”.
Let’s get back to the immediate plans. SAS needs to raise the next tranche of money, more than $50 million for GomSpace to build the constellation of 200, but a total of $200 million “including building, launching, operations, R&D and additional ventures”, he says.
“It’s not going to be easy. It’s never easy to get someone to invest in your company. It’s easier than it was a month ago, because a month ago we had nothing. Two years ago we started out and we have done everything we said we would.”
SAS has a contract with Virgin Orbit for four dedicated launchers, but that company – founded out of Virgin Galactic earlier this year – hasn’t started commercial launches yet. Moalem and his colleagues are looking for an alternative as a contingency.
At the same time he’s building up his UK team, and will be ready to announce the location of the London office soon. “We’re expanding the business in London, transferring gradually to London, and these things take time. Australia is a long trip. We spent a lot of time thinking what the company should look like. We have a very clear strategy and vision and we knew we would be global,” he says.
“We were looking to set up somewhere in the US or the UK. But in the US there are regulations and restrictions on overseas companies and [the US is] far from where we live. The UK decided a few years ago that it wants to promote the space industry.” SAS’s satellite spectrum comes from Ofcom, the UK regulator.
The corporate headquarters will remain in Australia, and the London office will be small, with no more than 20-25 people. “We’re outsourcing the manufacturing and launch of satellites.” There is a software arm in Poland. “We have a very good workforce. They’re ex-Ericsson,” he says.
“Part of what we’re doing is not just building a business. It’s changing the world for good. We will provide this basic human right, communications,” he concludes.