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Chowdhry: Facebook Isn't Building A Communications Satellite, But Is Using Eutelsat And Spacecom

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Facebook Inc (NASDAQ: FB) announced its capex at the high end of the $4 Billion to $4.5 Billion guidance range. Global Equities Research’s Trip Chowdhry said that this was probably not because the Communications Satellite Launch, since¬ the Satellite initiatives is less than $200 million, possibly around $100 million.

Analyst Trip Chowdhry mentioned the following takeaways from the F8 Conference and conversations with SpaceX Rocket Scientists:

  • Facebook is not building the Communications Satellite.
  • The company inked a long-¬term deal with Eutelsat and Spacecom to use capacity on Amos 6 Satellite. According to the deal, Facebook would only use capacity on the Satellite, to connect 11 African countries to the Internet, and not design the whole Satellite.
  • Elon Musk's SpaceX would be launching the AMOS 6 Satellite in July¬ or August this year, and is likely to charge about $100 million for the launch.
  • Since AMOS is a GEO Satellite, it will not cost more than $200 million to $250 million, and 3-10 companies would share the AMOS 6.
  • It is highly unlikely that Facebook would pay the whole $300 -$350 million [Satellite cost: $200 million to $250 million + Launch (SpaceX) cost: $100 million]
  • “We think FB will at most be paying 1/3 of $300 million to $350 million or about $100 million at the high--end, but probably more like $100 million or so...as the number of companies sharing the Amos 6 is between 3 and 10,” Chowdhry wrote.

Posted-In: Global Equities Research Trip ChowdhryAnalyst Color

 

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