Shares of the Israeli satellite operator Spacecom plunged by a third on Sunday after it said it had lost contact with its Amos 5 communications satellite, cutting off customers. Spacecom said it did not know what caused the problem and had been unable to reestablish contact with the satellite.
“Spacecom is working around the clock, doing the utmost to speed service recovery for its customers,” CEO David Pollack was quoted as saying in the industry news site Advanced Television. “Our service teams are looking for solutions for our customers to enable their broadcast signals and data communications streams to continue with minimal interruption.”
Industry experts described the total loss of contact with the satellite as a highly uncommon event, but the company said that even if that were to happen any losses would be covered by a $158 million insurance policy that would be used to cover a forced early repayment of a $140 million bond series directly linked to Amos-5.
“In the event of a total loss of the satellite there will be a negligible effect on the company’s equity,” Spacecom said in a statement to the Tel Aviv Stock Exchange. “The company is continuing to examine the overall aspects of the event and will update with any development.”
However, loss of the satellite would impact on future revenues. Amos 5 brings in annual revenue of some $40 million and accounts for about $136 million, or about a fifth, of the company’s order backlog. The satellite itself has an estimated value of between $160 million and $190 million.
Shares of Spacecom, which is 64.5%-owned by Shaul Elovitch’s Eurcom Group, plunged 35.5% to close at 34.69 shekels ($8.92).
Launched in 2011, Amos 5 is in geostationary orbit over Africa and its coverage extends over Africa, Europe and the Middle East. In Africa, it is regarded as playing a major role in the continent’s emerging satellite services market. Nevertheless, the setback comes at an awkward time for Spacecom because Eurocom is in the process of selling the company, which is valued at 1.1 billion shekels.
Unlike the first four Amos satellites, which were built by the Israel Aerospace Industries, the Amos 5 satellite was built by, ISS-Reshetnev, one of Russia’s leading satellite providers.
Spacecom had revenue of $54 million in the first half of the year, leaving it with a loss of $1.4 million. The company is scheduled to launch Amos-6 in 2016, but it was not designed to replace Amos 5. Spacecom has signed a contract with Facebook to provide Internet coverage to large parts of sub-Saharan Africa.
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