The Space Company begins a private fundraising of 150 million dollars * For three years, the Space Company was unable to fill the capacity of the Israeli satellite 'Amos', and suddenly it finds itself in the opposite situation, when Amos 1 is full, and it is forced to refer some of its customers for an interim period to alternative satellites until the launch of Amos 2. Interview with the CEO of the Space Company, David Polak
The interview was first published in Electronics magazine, September 2000
Last month we published a small scoop in Elektronika, which arrived the way many scoops arrive - someone thinks this is known and mentions the scoop casually. In our case, we learned about the planned existence of Amos 2 from Yes's response to our questions about the two-way Internet.
In an interview with 'Elektronika', the CEO of Space, David Polak, says that in the coming weeks, Space is supposed to finalize the contacts with banks and other entities that will assist in the initial financing of the Amos 2 satellite. Space, and Israel Aerospace Industries is already planning the construction of the satellite in collaboration with leading subcontractors. Amos 2 is planned for launch in the first half of 2002
The ownership of Lavin 2, in contrast to Amos 1, will belong to the space company only. Polk emphasizes that this will be a completely commercial project. While Amos 1 was a national project owned by the Aerospace Industry and aided by the state, and the space company only served as the entity that marketed the satellite, "Amos 2 will not require assistance from any governmental or semi-governmental body, including the Aerospace Industry, but only in the sense that it holds 25 percent of the ownership in the space company (The others are Gilat Communications, H. Mr. and the general group for satellite services headed by Meir Amit, who also serves as the chairman of Halal.) The financing of the satellite will be partly an investment by owners, partly a loan from leading banks and partly raising capital on the stock exchange in the form of marketable bonds. The total cost of the program is about 150 million dollars, including the satellite, the launch, insurance and all related expenses.
In response to the question of how much the cost of the Amos 2 satellite differs from that of Amos 1, Polk says: "It is impossible to compare the two satellites because in the case of the first satellite, there were development expenses for the first satellite, and here there are only adjustment costs."
For three years the company was unable to fill the capacity of the satellite, and suddenly it finds itself in the opposite situation: Amos 1 is fully loaded. And beyond that, there is such a large excess of demand for the satellite services, that the company had to refer some of the customers for an interim period of about a year and a half to alternative satellites. For example, the broadcasts of Channel 33 of the Broadcasting Authority and some of Gilat's services were transferred to other satellites. According to Polk, this was not easy from a technological point of view, and sometimes customers will have to compromise on quality: "There are services that, in terms of the satellite's transmission power or the satellite's reception capacity (the line returning from the ground), cannot be transferred to other satellites. Not many satellites have the capabilities of the Amos, and not every satellite can transmit every broadcast." The main criterion, of course, was to disturb the customers as little as possible, and therefore the services that passed were such that fewer antennas need to be aimed at them, and therefore it is easier to change their location.
One of the reasons for the load on the Amos satellite is the introduction of commercial satellite TV broadcasts. The Yes services cannot of course be split between several satellites. Each of the hundreds of thousands of expected subscribers to the company will have only one antenna, and it will only be able to point it in a certain direction in the sky. Therefore, all 80 Yes channels will remain on the load. But don't worry, even when Amos 2 is placed in space, there will be no need to limit the number of Yes channels. The satellites will operate in what is known as CO-LOCATION. This means that the satellites will be close to each other in the Clark band - that band at an altitude of about 36.4 thousand km above the equator where the satellite orbits the Earth (at the same speed as the Earth orbits itself), and therefore it is Looks like it's hanging in place. Amos 1 lies in this strip above the intersection between the equator and the longitude 4 degrees West, above the Atlantic Ocean. There is no chance of a collision between them, because today the satellites are placed at a distance of at least 60 km from each other, and therefore even a distance of several kilometers will not require re-tuning of the antennas, and the same tuning can be used for both satellites.
There are companies that operate satellites that place 5-6 satellites at each point, the method is known as - Hot Spot, a point that has a number of satellites and a large backlog of TV channels and other services.
Q: What are the performance and differences compared to the Amos 1 satellite
Polk: "Amos 2 will have 22 active segments of 36 MHz compared to 14 of Amos 1, that is, an increase of 150 percent. Its power in the center will be similar, although even at load 1 the power in the center is very high. However, the power in the distant transmission areas will be higher, and thus it will be possible, for example, to transmit to the Gulf countries a transmission that was not possible in Amos. The satellite will also have a beam to the USA, which will allow connection to the Back Bone of the Internet, and direct transmission to residents' homes both in Europe (like Amos 8211) and in the Middle East. The lifespan will be similar to Amos - 1. According to the plan, we expect 1 years, but in practice we expect more"
Here it is worth noting that during the launch of Amos 1, the operators in the aerospace industry were able to direct the satellite with less fuel than the average required, to raise it from an altitude of several hundred kilometers (the altitude at which the launch rocket leaves it) to an altitude of 36 thousand kilometers. This fact added at least one year of life to him.
In terms of the number of respondents, the coverage area and the beam to the USA, the Amos 2 satellite will have a higher power than the Amos 1, and the very fact that they will be placed next to each other gives backup and strong power to both satellites.
Q: What will be the uses of the satellite?
The uses of the satellite will be mainly for digital television, the Internet and multimedia for interactive programs, presentations, etc. Two-way Internet is a new topic, not from the technological point of view - because it already exists on a commercial level. This is a new issue at the commercial level from the point of view of the end equipment price for customers. The price of the end equipment for customers is very high and therefore not suitable for private customers.
There are currently two major international ventures on the subject: one venture is by Gilat, Microsoft and Eco-Star and the other by AOL and Direct-TV. The goal of both is to reach an inclusive service price, which also includes the equipment in the user's home so that it will be attractive and enable the use of high-speed satellite internet at home level.
In contrast to today's price level, which is mainly suited to the commercial organizational level, the world of satellite communications wishes success to both competing groups and is organizing to add satellites and film width in space to market to everyone's customers. Apparently, this service will mature commercially mainly in 2001. We hope that in terms of the schedule for launching the satellite we will not be late for the train. According to what it looks like today, the satellite will arrive in our regions approximately when the other services also arrive in Israel.
The original idea of the loaded satellite in the early nineties was to place two satellites in space in co-location. In principle, one large satellite or two small satellites can be launched, Polk says. In terms of price to the respondent, there is an advantage to a large satellite. In terms of development and reducing risks, two small satellites have an advantage.
The approach was to reduce the risks and go for two small satellites. This direction proved itself, in retrospect, because it took time for Amos 1 to fill up, and it would have cost a lot of money to have a large satellite in that orbit. Now, a temporary shortage of about a year and a half has accumulated, and we hope to overcome this by temporarily transferring customers to another satellite. We very much hope that Amos 2 will be launched no later than the first half of 2002
Q: There was no talk of a satellite in cooperation with Hungary?
"At an earlier stage, there was thought that the second satellite would be a joint venture with an Eastern European country. It is said about Hungary that Amos has a beam to the center of Europe. The matter failed to mature despite the agreements we had with the Hungarians. This happened because of the collapse of the television and advertising market in Eastern Europe, due to the economic slowdown caused by the collapse of the Russian economy in 1997. The collapse affected the economic situation in Eastern Europe and the economic conditions were not created there to support such a venture. The venture with the Hungarians was not canceled but was frozen at this stage, until the market in Eastern Europe recovers. This has nothing to do with the fact that we also address customers in Eastern Europe. We also sell in Amos 1 in Europe. There is no connection between the ownership and the customers. The intention was a joint venture with joint ownership and joint financing. As mentioned, we are currently self-financing, without even the participation of the Israeli government. The very demand is the basis for the need for another satellite."
Q: Will Amos 2 also be launched by Ariane?
"The launch will indeed be carried out by the Ariane company that launched the Amos 1 satellite. This company has a record of nearly a hundred successful launches without failure in the Ariane 4 launcher. The new and heavier Ariane 5 started off on the left foot, but since then it has already had three successful commercial launches (no development of launchers without failures). Ariane 5 will serve at the same time as Ariane 4. It will be able to carry heavier satellites into space. At a later stage, Ariane intends to rely only on Ariane 5
During the busy period, 2 will still be able to be selected, and apparently this time it will also be a launch via an Ariane type 4 launcher. Like all Ariane launches, this launch will also be carried out from its origin in the equatorial region of French Guinea.
Q: Will you go to Koro?
At the time of launch I will be at the control station of the satellite at the aerospace industry.
H.L.L reduces the scope of the fundraising to NIS 91-70 million and offers high interest bonds
1.1.2001
The science service
After a delay of several months and many changes in the structure of the issue, the bond issue of the HLL satellite communications company should finally go on the road this week. The company will operate the communication satellite Amos 2, which is supposed to be launched into space in 2002. The structure of the offering is not yet finalized, when in the tender that will be held on Wednesday, the investors are supposed to choose one of two alternatives. Alternative A includes 324 bonds and 3 options, with the proceeds of the immediate raising amounting to NIS 69.7 million. Alternative B includes 424 bonds and 2 options, and for the immediate raising increases to NIS 91.6 million.
If the warrants issued by HL for bonds are exercised, the company will raise another NIS 68.5 million in the first alternative and NIS 45.6 million according to the second alternative. In addition, if the underwriters exercise the options given to them on the eve of the offering, the company can raise another NIS 11.6 million. The issue is led by the underwriting companies of IBA and Leumi Co.
The shareholders of HLL are the Aerospace Industry (24%); Eurocom (24%); The General Company for Satellite Services (24%), whose main shareholders are Meir Amit, Hazi Carmel, Ligad (recommendations, announcements, quote/news) and Yair Roteloi; and M.M. Satellites (24%), which is controlled by Haim Mer (the controlling owner of H.Mer Industries) and M.T.Y Antennas. The CEO of HLL, David Polak, personally owns 4% of the company's shares.
In the past, HLL was supposed to issue shares, options and convertible bonds, and raise an amount of NIS 220 million, but the weakness in the capital markets and the primary market forced the partnership to raise capital by selling bonds at a discount. The bonds issued by H.L.L. will initially bear an annual interest rate of LIBOR%+5.25 which will decrease as the satellite project progresses and its launch into space. Just for the sake of comparison, it can be noted that in the issuance of the convertible bonds carried out by Combers and Teva abroad, the interest rate at the issuance was set at LIBOR +1.5%-1%
H.L. intends to designate all of the net proceeds of the issue for payments to the aerospace industry to finance part of the cost of purchasing the Amos communications satellite, 2 the cost of which is estimated at 130 million dollars to build and launch.
A commitment by YES and an agreement with the Israeli government Amos 2 is supposed to be the younger brother of Amos 1, a communications satellite that was launched into space in May 1996 and SHLL is engaged in marketing its capacity in the Israeli beam and the European beam. A beam is a set of antennas installed on a satellite and the ground area covered by it, which enables direct communication from the transmitting ground station to the satellite and back from it to customer sites in a certain continental sector (Europe, Israel, etc.).
Amos 2 is produced on the basis of the platform of Amos 1 with the addition of adaptations and technological improvements, so that its production does not involve conducting research and development. The duration of the service period of Amos 2 should be 11 years, subject to the amount of fuel used to stabilize it and keep it in place.
The satellite will include 3 beams, the first towards the Middle East, the second towards Central and Eastern Europe, and the third towards the east coast of the USA. The bandwidth of the satellite capacity in Amos 2 is 792 MHz, and it consists of 22 space segments (frequency bands with a bandwidth of 36 MHz) compared to 14 space segments in the Amos 1 satellite.
The main reason for the demand for satellite communication services is the need for broadband communication infrastructure to provide multi-channel television services (DBS) for high-speed Internet and multimedia. Indeed, the full occupancy that the Amos 1 satellite enjoys today is primarily due to the leasing of space segments to YES, the satellite television operator in Israel.
YES has committed to lease 6 segments of space, in addition to those it has already leased in Amos 1. The Israeli government has also already signed an agreement according to which it will lease 4 segments of space in Amos 2. Also, contracts have already been signed with the Broadcasting Authority to transfer broadcasts from Amos 1 to Amos 2 if it cannot contain them. A similar agreement was also signed with METV, operator of the Middle East channel.
A total of 11.9 space segments have been leased so far in Amos 2, which is 54% of its lease capacity. The revenues from the leased space segments should generate annual revenues of 24 million dollars. Also, H.L.L is negotiating with the Second Israel Television and Radio Authority to lease a segment of space for the second commercial channel.
