Coronas on Mars? (7/26/2022)

Good morning. It's Tuesday, which means we're live with another Pathfinder podcast. Read on for episode details and to find out where you can watch or listen.

In today's newsletter:🚀 Pathfinder #0009🛰️ Another satellite merger?🔁 On the move

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Pathfinder #0009, ft. Tim Ellis

On today’s episode of Pathfinder, we’re joined by Tim Ellis, the CEO and cofounder of Relativity Space.

Tim was in his late twenties when he started Relativity with cofounder Jordan Noone six and a half years ago. Fast forward to today: Relativity’s 3D-printed Terran 1 rocket is at the pad in Cape Canaveral and an orbital launch attempt is “weeks away,” Tim tells us.

• Relativity also recently said it has secured more than $1.2B+ worth of launch agreements for the forthcoming, fully reusable Terran R rocket.

• While the spotlight is on Terran 1, Tim says “our momentum towards Terran R is significant” and more customer contract announcements are coming soon.

• In fact, just since we recorded 12 days ago, Relativity announced a highly ambitious commercial Mars mission with Impulse Space.

Pathfinder is brought to you by SpiderOak Mission Systems, an industry leader in space cybersecurity.

A sneak peek of the discussion

• Tim pursued a non-linear path into aerospace at USC, where he was part of the first student group to launch a rocket to space and interned back-to-back-to-back at Blue Origin

• Then, Tim and Jordan would go on to cold-email Mark Cuban, get accepted into Y Combinator, build prototypes while going through the accelerator, and successfully pitch their pre-revenue, pre-product startup to big funds.

• Relativity is scaling headcount quickly, from 100 employees before Covid to 850 today and 1,000+ soon.

• We walk through the unique parts of Relativity’s rocket-making stack, from propulsion to reusability to 3D printing, “the holy grail of automation technologies for aerospace.”

• We ask Tim how he’s navigating market turbulence and whether Relativity A) has taken a valuation haircut, B) will need to raise again soon, or C) if it ever considered a SPAC.

• Tim shares his thoughts on the economics of launch and where the market is saturated vs. undersupplied.

…and much more. Over the course of an hour, the discussion ranged from writing novels and Fight Club to interplanetary travel and chilling on Mars with a Corona.

Show links for Pathfinder #0009

▶️ Watch on YouTube🎧 Check it out on Spotify🍎 Tune in via Apple💾 Bookmark for later

One European Broadband Company to Rule Them All

Eutelsat and OneWeb confirmed this week that they're in talks to merge.

Refresher: OneWeb is building a LEO broadband megaconstellation to rival the likes of Starlink and Kuiper. The UK company has launched 428 satellites (~66% of its planned constellation). France’s Eutelsat, founded in 1977, operates a fleet of 36 GEO satellites that provide broadcast and broadband services across the globe.

The two have signed an memorandum of understanding that would see them join forces to provide integrated multi-orbit broadband service.

The race to multi-orbit: OneWeb and Eutelsat would join a handful of companies planning to launch multi-orbit service, primarily driven by M&A. Viasat ($VSAT), the American GEO operator, is nearing a takeover of Inmarsat, while Eutelsat competitor SES currently operates satellites in both GEO and MEO.

• This also isn’t OneWeb’s first shot at a multi-orbit merger. Intelsat and OneWeb announced a plan to merge in 2017, but the deal fell through four months later.

M&A rationale: Combining LEO and GEO services would allow operators to leverage the higher capacity and reliability afforded by GEO and LEO’s lower latency.

Merger details: Sources told the FT that Eutelsat is looking for growth prospects since satellite video demand is in secular decline. OneWeb, meanwhile, has a capex problem: It needs $2B-$3B in fresh financing to carry out its ambitious plans.

• With OneWeb poised to become a key provider in the competitive, cash-intensive LEO broadband market, and with Eutelsat averaging $700M in free cash flow over the past five years, the deal ticks the boxes for both companies.

The all-share transaction would value OneWeb at $3.4B and create a new company, with ownership split 50/50 between the two companies’ current shareholders.

• The UK currently owns ~20% of OneWeb after investing $500M (£416M) in 2020 to resuscitate it from bankruptcy.

• French and Chinese sovereign funds own 20% and 5%, respectively, of Eutelsat.

• OneWeb’s largest shareholder, Bharti Global, owns 30%--and is itself owned by Indian billionaire Sunil Bharti Mittal. Eutelsat is OneWeb’s second largest shareholder, with a 23% stake.

Too many cooks? The merger would bring a potpourri of public and private players together in ownership of the new conglomerate (or require divestitures). France and the UK would get ~10% stakes and one board seat apiece, while Bharti would own ~18% of the new company and become co-chair of the board, per the FT.

• The UK has already won concessions, sources told the Guardian, like veto power over moving a future HQ out of the UK and the right to mandate the new entity’s take on certain government contracts.

Not so fast…This is not a done deal and talks could still fall through. Even if an agreement is ironed out, the companies would have plenty of regulatory, antitrust, and cap table hoops to jump through. Credit Suisse said the deal is “likely to be scrutinized heavily” from a competition lens, given British UK concerns about outsized foreign influence in its space sector.

+ How’d the market react? Not great; Eutelsat’s stock fell 17% Monday.

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In Other News

• Russia says it will walk away from the ISS partnership in 2024 and pursue plans to build its own space station.

• The FTC is reviewing whether to bring legal action against Northrop Grumman ($NOC) for “alleged violations” of a 2018 settlement that cleared the way for the $9.2B Orbital ATK acquisition, Politico reported Friday.

• GomSpace (SEK:GOMX) reported 51.25M million Swedish krona ($5M) in Q2 ‘22 revenue, up 8% YoY.

• Mark Clampin, NASA’s next astrophysics director, says keeping the Nancy Grace Roman Space Telescope on track is his top priority.

• NOAA’s GOES-17 satellites tracked smoke and heat from the Oak Fire that broke out Friday near Yosemite. At 17,000 acres, the Oak Fire is the largest wildfire in California this year.

• Elon Musk denied WSJ reporting that he had a brief affair with Google cofounder Sergey Brin’s wife.

• New NASA satellite images underscore the extent to which Lake Mead, the US’ largest reservoir, has depleted. Receding water levels have mineralized much of the shoreline and the reservoir sits at just 27% capacity, per NBC.

The View from Mars

NASA's Perseverance rover stopped to snap a photo of a sedimentary rock formation on Sunday. The Mars rover is on a journey through an ancient Martian river delta in search of signs of life.