The clock is ticking for Declan Ganley’s plans to launch 300 satellites by June of 2026.
Ganley, the chief executive of Rivada Networks, is aiming to create an array of hundreds of satellites to deliver a kind of private, unhackable internet that he has dubbed “The OuterNet”.
It’s no small job to begin with, and further complicated by the fact that overhanging it is a series of very tight deadlines. Under the rules of the International Telecommunication Union (ITU), an agency of the United Nations that governs information and communications technologies, Rivada has until June 2026 to get the first 300 of those satellites into orbit.
Which means that a lot hangs on how quickly Rivada can raise the first $2.4 billion (€2.2 billion) to pay for the satellites – and that’s just the first payment in what will likely be many billions more to pay for a project of this scale.
So far though there has been very little insight available into just how much of that cash Rivada has raised, or how far along the work has progressed.
Last week, we got a glimpse of the progress on the OuterNet from Rivada’s main contractor, Terran Orbital, which as a public company must give regular updates on its business, including payments from Rivada.
In the first three months of 2024, Terran received just $1.7 million from Rivada, which comes on top of the $6.9 million it booked in total revenue from Ganley’s company in 2023, as disclosed in a previous set of financial statements.
That’s a small fraction of the nearly $2.5 billion it will need to pay Terran in the next 24 months to get the satellites built.
Just when they’ll start doing that has been on the minds of both shareholders in Terran and financial analysts covering the company, given that Rivada’s contract constitutes nearly 90 per cent of Terran’s order book.
On an analyst call this week, Terran’s chief executive Marc Bell was somewhat guarded when it came to answering any questions about Rivada.
He acknowledged that Rivada’s $1.7 million payment was “a modest contributor to our first-quarter revenue”, but noted “we have agreed in principle on a payment schedule that we believe will keep the programme on track and make the launch timetable”.
Beyond that, he directed analysts to address their questions to Rivada, an instruction he noted was “at the customer’s request”. He later elaborated that Rivada “want to be able to control their own narrative on it”.
That narrative has been a little hard to parse in recent months, however. When the news of the Terran deal was first announced, in the middle of 2023, people close to Rivada suggested that it would use export credit financing, a form of debt, most likely from the Export-Import Bank of the United States.
But to date there has been no announcement on that source, amid industry suggestions that it had tapped up a number of sovereign wealth funds as a source of funding.
For example, towards the end of 2023 Bell of Terran hinted that funding had been lined up. He said so in several different forums, sometimes to Terran staff in company town halls, sometimes to analysts on investor calls. At one point he was quoted as saying that a “large sovereign that has not yet publicly announced their support for the project” and insisting that the company had “done extreme due diligence on [Rivada’s] financials”.
Indeed, he was confident enough at one point in 2023 to say that Rivada was set to pay about $180 million in the second half of the year.
He elaborated on that in December, telling employees he’d had dinner with Ganley in Washington, DC, during which Ganley had told him Rivada was near to closing on a funding round.
As Bell put it, “He showed me the documents. I saw them, I read them. He texted me this morning and maybe Thursday, Friday now. […] As long as it’s by Christmas, I’ll be happy. Nothing wrong with getting a good Christmas present,” he was reported as saying.
Around that time, as it happens, there was an indication of some fundraising activity buried in the company filings of an obscure Irish subsidiary called Rivada Networks Limited. That unit published in late December a number of company filings recording a fundraising round led by an entity called Dukhan Investment Company, with the implication that there were several other investors in the round.
Rivada declined to say just who is behind Dukhan, how much was raised, or who the other funders might be, citing a strict confidentiality clause surrounding the fundraising.
Either way, however much was raised, less than $10 million of it has made its way to Terran Orbital to date – at least according to Terran’s own financial records – and the questions over the subject continue to rumble away, much to the frustration of both Rivada and Terran.
The consternation of some shareholders was evident in an analyst call hosted by Terran Orbital this week, in which a number of shareholders were beginning to question the level of Rivada’s funding.
In response to specific questioning of Rivada’s funding by a shareholder, Bell, perhaps a little archly, noted that Terran has plenty of other customers and wasn’t exclusively reliant on Rivada. But, as he had done a number of times on the call, he directed the investor to put any such funding questions to Rivada.
When The Irish Times contacted Rivada’s spokesman, Brian Carney, he said the investor “can’t possibly have any basis for saying that, but we’re not going to get drawn into commenting because of other people’s ill-informed speculation”.
Nevertheless, into a vacuum rushes all sorts of speculation, and even experts have struggled to adequately interrogate the situation.
One such expert, Robert Spingarn, an analyst with Melius Research, an independent research firm in New York, conceded there was little that could be said about Rivada since it had said so little about itself, and had apparently instructed Terran to do the same.
As a consequence, he said: “We think Terran investors are heavily limiting the Rivada opportunity in their valuation of Terran until visibility improves around the contract.”
Meanwhile, even if the money begins rolling in tomorrow the deadlines for producing and launching those satellites are perilously close, and the timeline will prove exceedingly tight for Rivada, according to Tim Farrar, a satellite industry consultant at the California-based TMF Associates.
According to Farrar, the small sums of money paid over so far imply a relatively modest amount of work having been done to date, given the industry standard rates for rocket scientists.
“There seems to be no bills for hardware, so you can assume that what they’re doing is paper-based, or computer-based – coming up with the design before you start bending metal,” he said.
“That first deadline is now less than two years away and it’s pretty inconceivable you could go from nothing to 300 satellites in orbit in less than two years,” he said.
“The time frames they’re talking about for getting this up and running and meeting ITU deadlines are unprecedented,” he said. “They seem way too optimistic.”
In fact it has already missed one of its deadlines, which required it to have 10 per cent of its satellites in orbit by September 2023, but the ITU granted it a waiver on that one.
If it doesn’t make the June 2026 deadline – which requires it to have 144 satellites launched, with six spares – it might decide to aim for the second one, which is September 2026, which is also for 144 satellites with six spares.
If the ITU accepted that particular strategy, according to Farrar, it would result in a much smaller OuterNet, certainly not what Rivada or Ganley would be hoping for.
Not everyone is quite as bearish, however. Josh Sullivan, an analyst with Benchmark Research in New York, said that for any company that wanted to get satellites built quickly, Terran was one of the leading options.
“Lockheed Martin, one of the largest defence corporations in the US, is using Terran’s capability to manufacture very high-end satellites, and they own a third of the company and wanted to buy it for a dollar a share,” he said.
And even after the deal was rebuffed by Terran, Lockheed still awarded the company another contract to build 18 more satellites. “That’s a pretty good proxy,” he said, for the qualities of Terran Orbital.
Moreover, Terran has geared itself to suit precisely this kind of client, Sullivan said.
“Terran – and maybe this is one of the reasons they were selected – touts their ability to build and field satellites at a very high rate compared to legacy production schedules,” he said, with a high degree of capacity in its new facility and a lot of automation.
So far, however, all of that is conjecture, and Rivada is keeping its counsel.
On the question of how much Rivada had spent so far, or how it plans to pay over in the coming years, spokesman Carney declined to comment.
He also declined to say whether the two companies had agreed a new payment schedule. Bell had said during the analyst call the two parties had “agreed in principle on a payment schedule that we believe will keep the programme on track and make the launch timetable”.
“The programme is on track to meet all of our milestones, as Marc confirmed. Beyond that we have no comment,” Carney said.
Carney confirmed that Terran and Rivada are still in the preliminary design review stage – effectively the drawing board – though he said he expected that phase to be complete in the next month or two. “What follows is satellite construction,” he said.
He added that Rivada plans to launch “at least two, and up to four, precursor satellites” by the end of this year, the purpose of which is to “demonstrate certain features of our constellation and to allow some customers to test certain capabilities and compatibility with their own equipment”.
Once those satellites are in orbit, the company will have about 18 months or so to launch its first tranche proper, which is due to take place by June 2026, according to the deadlines set out by the ITU.
“We are not seeking any waivers or extensions and the rules do not provide for them anyway. Our plans haven’t changed,” he said.
“We expect to meet milestone two in 2026 and to be fully deployed by 2028. That means 288 satellites in orbit in 2026 and 576 by 2028,” he said. “The programme is on track, as Marc confirmed, and the OuterNet will change the world,” he added.
What he didn’t need to say was that this will mean unveiling that $2.4 billion soon – and several billion more soon after.
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