New space economy driving growth
Over the last 25 years the ‘New Space’ economy has been planning a revolution in space. The plans are now being enacted with commercial operators launching crewed spaceflights and an increasing number of satellites primarily into Low Earth Orbit (LEO). A data hungry world is seeking space services to address issues such as connectivity, communications, security, climate change, resource management and disaster response. The traditional backbone of data provision has been the Geostationary Equatorial Orbit (GEO) satellite networks with high cost and persistent high capacity. Their position is now being challenged as the growth in data and connectivity demand has driven the New Space segment to develop cheaper access for customers. The launch segment has reduced cost per kg to less than $1,000, while the capital cost of LEO small satellite networks has fallen with increasing payload capabilities as technology develops for sensors, controls and power. With only around 4,000 satellites in operation today – and potentially 100,000 to be launched over the next decade – growth should accelerate.
Sorting the space debris from the stars
The opportunity is clear, and while the incumbent operators are challenged, they are also involved in the new developments. However, the number and variety of New Space business models is substantial covering all aspect of space missions, from design, development and manufacture of spacecraft (including satellites) and their subsystems, through launch, deployment, operation and data sales. The dozen space-related SPAC (special purpose acquisition companies) listings since Virgin Galactic in October 2019 reflect the variety of ambitions and technologies. In reality, there are potentially several thousand other companies seeking a flightpath to commercial success. Not all will win and at this stage clear winners are hard to identify as the recent performances of the SPAC listings suggest. Those that do should provide an exciting ride, but investors should pick their space vehicle with care.
Geopolitical tensions could disrupt growth
The recent increase in geopolitical tensions has the potential to impact these growth plans. In recent decades space has been a relatively collaborative environment, especially on the commercial side. With at least one major nation involved in conflicts likely to face sanctions for some time, the benign operating environment could become more hostile. Some launches appear to have been disrupted already and greater operational obstacles could appear.
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