Google-backed broadband satellite operator O3b now financed for launch

Stuart Corner
Monday, 29 November 2010 20:06

IT Industry - Strategy

O3b Networks, the Google-backed company planning to provide broadband services via satellite to the 'other three million' beyond the reach of current networks has secured sufficient funding to launch its planned satellites and start commercial services in 2013.

The company has announced that it has secured a total of $US1.2b from a group of investors and banks. It says: "This will see the company through to the launch of its first satellites which will provide low-latency, fibre-quality Internet connectivity between developing markets and the global internet infrastructure."

O3b was unveiled in September 2008. It now plans to launch the first eight satellites by Arianespace with a Soyuz launcher from French Guiana. ViaSat will provide the teleport and trunking product customer terminals. O3b had initially planned a mid ocean launch from Sea Launch company during 2010.

Thales Alenia Space is constructing O3b's first eight Ka-band satellites. O3B says: "The design of the system means that it will be possible to add many more satellites to the constellation, increasing capacity and transforming satellite communications for the developing world."

Global satellite operator SES - owner of satellite operators SES Astra and SES World Skies - will be the largest shareholder. It will investment of up to $US75m in cash in the next three years. SES to give it an initial shareholding of approximately 34 percent, expected to rise over the next two years to approximately 44 percent, also taking into account in-kind services that SES is contributing to O3b Networks. These in-kind services include engineering, commercial and other support to O3b in order to assist the company's development.

The latest equity financing is being provided by a group of existing shareholders that includes Google, North Bridge Venture Partners and Allen & Company, with SES, Liberty Global and HSBC Principal Investments taking the leading role. New investors include the Development Bank of Southern Africa, Sofina and Satya Capital.

The total funding now comprises a $US510m Coface-backed senior debt facility provided by HSBC, ING, CA-CIB and Dexia; a $US115m senior debt facility and a $US145m mezzanine facility provided by HSBC Principal Investments, DBSA, AFDB, DEG, Proparco, FMO, IFC and EAIF; and $US410m in equity financing, of which $US230m is new equity investment.

O3b's satellites will be placed in medium earth orbit 8,000kms from the earth, and, the company says will provide providing access to approximately 70 percent of the world's population with fibre quality Internet connectivity. O3b does not intend to serve end users directly but rather to provide satellite backhaul.

The 8000km orbit will proved much lower latency than the 36,000km of geostationary satellites and the company at one point looked to be making a play for a role in the NBN. Founder and then CEO, Greg Tyler, fronted the Senate NBN enquiry in late 2009 to tell it that geostationary satellites - as currently planned by NBN Co - would not deliver satisfactory broadband services to rural Australians.