Chinese Firm Buys Israeli Spacecom Despite Explosion That Blew Up Facebook Africa Payload

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Written by Dana Sanchez

Chinese company Xinwei agreed to buy Israeli satellite company Spacecom for $190 million despite a Sept. 1 rocket explosion on the launchpad in Florida that took Spacecom’s share prices down more than 50 percent.

The rocket itself — the SpaceX Falcon 9 — was owned by tech and space entrepreneur Elon Musk, a native South African. The rocket’s payload, Amos 6, was one of the Spacecom series of satellites built by Israel Aerospace Industries, according to an earlier AFKInsider report.

Facebook had planned to use some of Amos 6 satellite’s capacity to expand internet access in Africa.

SpaceX, one of the companies that launches cargo ships to the International Space Station, was set to launch the satellite for Facebook on Sept. 3 from Cape Canaveral, Computerworld reported.

Facebook founder mark Zuckerberg was visiting Nairobi when he heard of the explosion. He had announced earlier in the week that the social network planned to launch a satellite later that week to make the Internet accessible in rural areas of sub-Saharan Africa.

Zuckerberg said he wouldn’t give up on internet for Africa.

The timing of the explosion was terrible for Spacecom Satellite Communications Ltd., according to Israeli business new site Globes.

In August, Spacecom closed a $285 million sale deal with Beijing Xinwei Technology Group. A week later, the Amos 6 satellite was destroyed on the SpaceX launch pad explosion. Spacecom share prices plummeted more than 50 percent.

The Chinese firm didn’t lose interest, instead adapting to the new situation. Xinwei deals in cellular communications, communications satellite operations, equipment and technical sales. It is owned by Wang Jing, a Chinese billionaire.

Spacecom’s market cap is $128 million. The Chinese company will pay $190 million, 50 percent more than the market cap, but 33 percent less than previously agreed.

The Sept. 1 explosion was not Spacecom’s first incident. In 2015 Spacecom lost contact with the Amos 5 satellite and all services to satellite clients were disrupted, Globes reported.

Amos 6 was expected to be Spacecom’s main future source of income, with a backlog of orders estimated at $345 million. One of the main deals cancelled following the explosion was Spacecom’s $95-million agreement with Facebook.

SpaceCom is being compensated for the lost satellite, and will receive a US$196 million insurance payout from a firm insured by Lloyds of London, Insurance Business reported. However it will not be compensated for an estimated $200 million in lost revenue for contracts signed with communications providers.

SpaceX may resume its rocket launches in mid-December, CEO Elon Musk said early November in an interview with CNBC.

“No doubt SpaceX will fix the problems, but if you’re a customer time is money,” Scott Pace, director of the Space Policy Institute at George Washington University and a former NASA administrator, told the New York Times in September, IB Times reported. “This will get customers looking at alternatives. It may give competitors an opening and slow down
SpaceX.”

French satellite communications company Eutelsat announced in mid-November a new division named Konnect Africa that it says is geared towards delivering fast access everywhere, HTXT reported.

Its satellites use spot beam technology which allows high speed internet with an eventual capacity of 1Tbps to be beamed to specific areas. The satellites have been specifically designed for use in Sub-Saharan Africa.

“Connectivity means nothing if the people that so desperately need it cannot afford it,” said Konnect Africa CEO Laurent Grimaldi. By partnering with service providers, Konnect Africa hopes to provide fiber-like wireless connectivity for 300-to-450 rand (about $20-$30) — still out of reach for many people, HTXT reported:

But because Konnect Africa doesn’t rely on physical cabling there exists the possibility for smaller towns to club together and create one central access point. While splitting connectivity is not the most ideal situation, it’s better than not having the connectivity at all.

Konnect Africa is looking to launch its service in the second quarter of 2017 in Benin, Burundi, Cameroon, DRC, Ghana, Ivory Coast, Kenya, Lesotho, Nigeria, Republic of Congo, Rwanda, Senegal, Swaziland, Tanzania, Togo, Uganda and South Africa. By 2019 the service hopes to have expanded to Angola, Ethiopia, Madagascar, Mozambique, South Sudan, Zambia and Zimbabwe.