Spacecom launching Amos 3 telecoms satellite tomorrow

On Thursday at eight in the morning, the Amos 3 communications satellite will be soaring skywards, further bolstering little Israel's status as a satellite-communications superpower. Barring glitches, at least.

Building the Amos 3 took three years. That effort, and sending it to outer space, is costing $170 million, including the cost of launch and insurance, confides David Pollack, chief executive of Spacecom. Like the Amos 2, this satellite will be fired into the reaches of outer space from Kazakhstan, which has made a tidy living from allowing satellite launches from its territory. The satellite underwent extensive testing of its systems in Germany, too, at the facilities of Industrieanlagen-Betriebsgesellschaft, better known as IABG.

"We're a member of a very exclusive club," Pollack says. "Egypt has satellites too, but only eight countries actually make satellites for commercial purposes: France, Germany, Japan, the U.S., India, China, Russia and Israel." England used to make commercial satellites but doesn't anymore, he adds.

Amos 3 was manufactured by Israel Aerospace Industries according to Spacecom's specifications. Spacecom, which owns and will operate the satellite, says it already has an order backlog worth $160 million, and that the Amos 3's capacity for the year to come is all but filled. The Amos 3's business plan covers 16 years, during which Spacecom expects the satellite to generate $520 million in revenues.

Providing Internet by satellite telecoms

Spacecom isn't the only Israeli company with a foot in satellite communications, a rapidly growing industry. Six other Israeli companies are in the ring, which are briskly selling services mainly in infrastructure-poor Africa - where business has soared 600% in the last six years.

And that's just for starters. Internet penetration is estimated to be only 2.5% in Africa, despite relatively high penetration rates in Egypt and South Africa, which skew the average. Because of the paucity of infrastructure for terrestrial communications in Africa, the road to the Internet passes through outer space.

One such company is Gilat Satcom, run by Roy Hess. Though also falling loosely into the category of "satellite communications", Gilat Satcom's business is very different from Spacecom. You could say that Spacecom brings the infrastructure. It is a "satellite operator", buying the satellite from IAI and selling "space capacity". Gilat Satcom provides the service that uses the space capacity.

Is there such a need that justifies so many companies in Israel? Evidently so: Israel is connected to the World-Wide-Web backbone by undersea cable and every home in the land is wired to the telecommunications grid, Gilat Satcom's Hess explains. But that isn't the case in many countries, not only Africa but also remote or mountainous areas, where solutions must come from the sky.

"We are the Internet provider of Internet service providers in places like Ghana and Zambia," says Hess.

Gilat Satcom's business of selling satellite communications services to developing countries brought it $40 million in revenues last year. Also last year, Eurocom's Shaul Elovitch bought the controlling interest in Gilat Satcom from Amit Berger.

Spacecom has no direct rivals in Israel, though it does in the world - Intelsat, SES and ABS, which sell satellite space for services such as television, telephone and Internet. Spacecom's customers include Boom TV, HBO and Israel's public-TV channels 1, 2 and 10, as well as radio. Its biggest customer is Israeli satellite television broadcaster Yes, which has already bought major chunks of the Amos 2 and Amos 3 satellites' capacity through 2016.

Incidentally, Spacecom, Gilat Satcom and Yes have something in common: Elovitch owns chunks of each - 85% of Gilat Satcom, 46% of Spacecom and about a third of Yes, which is otherwise controlled by Bezeq.

A third Israeli company in the field is Skyvision, a privately-held firm supplying Internet services in remote areas such as in Tanzania and Sierra Leone. It won't reveal its income but says it has 350 clients, mostly institutional ones (governments, oil companies, airlines) and that its revenues doubled in each of the last four years. Working in Africa has its own challenges; for example, sometimes glitches are caused by faulty electricity infrastructure. The Israeli companies working in Africa don't buy services from the Amos group of satellites, if only because their footprint doesn't cover the continent. But this is just the start of the story. Future satellites Amos 4 and 5 are expected to have an expanded footprint, covering Africa and Southeast Asia.