Contact with the Israeli communications satellite Amos 5 was lost on Saturday and customers are no longer receiving service, satellite operator Spacecom announced on Saturday. Spacecom is owned by the Eurocom Group.
Contact with the satellite was lost early Saturday morning. Spacecom said it had been unable to reestablish contact with the satellite and had not yet isolated the cause of the problem.
Launched in 2011, Amos 5 is in geostationary orbit over Africa.
Its coverage extends over Africa, Europe and the Middle East.
It is regarded as playing a major role in Africa’s emerging satellite services market.
Unlike the first four Amos satellites, which were built by the Israel Aerospace Industries, the Amos 5 satellite was built by Russian manufacturer NPO PM.
Industry experts described the total loss of contact with the satellite as a highly uncommon event.
The announcement comes as Eurocom is in the process of selling Spacecom, which has been valued at 1.1 billion shekels. Eurocom owns 64.5 percent of Spacecom.
Amos 5, which brings in annual revenue of some $40 million, has an estimated value of between $160 million and $190 million. It is insured by an international syndicate for $158 million.
“The Company wishes to clarify, based on the preliminary examinations it carried out, that even if there will be a ‘total loss’ (complete failure) of the satellite, this would have a negligible effect on the equity of the company,” Spacecom said in a statement.
The Russian-built satellite accounts for one third of Spacecom’s revenue.
Spacecom Satellite Communications Ltd. (TASE:SCC), controlled by Shaul Elovitch, has lost contact with the Amos 5 satellite, which has caused a hiatus in service to customers, mainly in African countries. According to the company’s notification to the Tel Aviv Stock Exchange, contact with the Russian-built satellite was lost at 06:45 on Saturday, Israel time.
Spacecom has a market cap of NIS 1.1 billion on the Tel Aviv Stock Exchange. According to its second quarter financial statements, the orders backlog for the satellite was $136 million. The satellite is recorded in Spacecom’s books at $153 million. In the first six months of the year, Spacecom had revenue of $54 million and posted a loss of $1.4 million.
Loss of contact with Amos 5 means the loss of about a third of Spacecom’s revenue. The Amos 6 satellite, for which Spacecom has already signed a $1 billion contract with Facebook, is due to be launched only in February next year. Capital market sources estimate that it will take about three years to launch a replacement satellite for Amos 5.
“The company shrank by a third this morning,” a market source said. Spacecom’s share price is indeed currently down by about 30% on the Tel Aviv Stock Exchange.
The Amos 5 satellite is insured to a value of $158 million, and Spacecom stresses that even if the satellite fails completely, the effect on its shareholders’ equity will be “negligible”.
Amos 5 was launched from a site in Kazakhstan in 2011, and even before its launch the company signed a five-year contract for satellite communications in Africa worth nearly $28 million.
Customers whose communication services are provided by Israel’s Amos 5 satellite found themselves at loose ends on Saturday when contact with the satellite was lost at 6:45 a.m.
In a report to investors and the Israel Stock Exchange, Spacecom, which owns the Amos 5, said it had no explanation for what specifically had caused it to lose contact with the satellite. A mechanical failure, a short circuit, or being struck by a meteor or space junk are all possibilities.
Amos 5, which was launched in 2011, includes 68 segments and covers the Middle East, Europe, and Africa. According to Spacecom records, Amos 5 has generated a total of $140 million in service orders. The satellite generates some $40 million in revenue annually and its worth is assessed at between $190 and $160 million.
Amos 5 is insured by an international syndicate for $158 million. In the letter to investors, Spacecom stated that initial calculations indicated that a total failure of the satellite would have only a marginal effect on the company’s capital.
Eurocom Group, which holds the rights to the satellite’s position at 17 degrees east will now have to locate a replacement satellite. A new satellite can be built and launched, or another satellite already in space and available for purchase can be acquired and moved into position to continue providing Internet and television services to the African market.
Only last week, reports were published that Spacecom had been contracted to provide television and Internet services to Cameroon.
The news that contact with Amos 5 has been lost comes as Eurocom, which owns 64.5% of Spacecom, is in the process of selling the company, whose market value recently stood at 1.1 billion shekels ($280 million).