Canberra-based EOS Holdings, acting through its wholly owned US subsidiary, EOS Defense Systems USA (EOSDS), will conduct a $10 million acquisition of the business and all assets of US-based space communications company Audacy Corp.
As part of the acquisition, EOSDS will outlay approximately $10 million in cash for the acquisition, including the substantial costs associated with securing mandatory US government spectrum licences and other acquisition costs.
Until recently, EOSDS was principally focused on establishing a US production capacity for EOS remotely controlled weapons systems (RWS) and counter-unmanned aerial systems products.
EOSDS production capacity based at the company’s Huntsville, Alabama, facility is on schedule, with EOSDS being restructured during 2019 to support a wider range of operations and business activities in the US, with a particular focus on the areas of space, missile defence and space communications.
Dr Ben Greene, group CEO of EOS, welcomed the announcement of the acquisition, stating, “EOS has previously disclosed its intention to enter the space communications market, and the acquisition represents a logical next step towards that goal.”
Audacy Corp was granted a space station (satellite) spectrum licence by the United States Federal Communications Commission (FCC) authorising it to use specific microwave spectrum bands for communications to, from and among specific satellites and ground-based communications stations.
Implementing the licence requires the launch of a new constellation of mid-Earth orbit (MEO) satellites to establish a wideband communications capability for continuous, real-time data transfer with low-Earth orbit (LEO) satellites and other space vehicles.
The licensing agreement requires that the licensor launch the MEO satellite constellation by June 2024.
Chairman of EOSDS, Ambassador John Barry (Ret’d) explained, “Following the completion of the acquisition, EOS will be able to build a satellite network that will provide a comprehensive, end-to-end communications and data transfer business to government and commercial customers, globally through a new constellation of EOS satellites in MEO.”
Space station licences are legal permits allowing an entity to establish, operate and maintain communications satellites, including authorisation for use of specific spectrum bands.
Companies require the licences as part of a statutory requirement for all microwave communications, and are controlled globally by the International Telecommunications Union (ITU) and for US operators by the FCC.
EOS has established a space communications business with advanced technologies for both microwave and optical laser communications. In the long term, EOS expects most space-based communications to be implemented with optical communications – widely considered a disruptive technology that is not regulated or controlled because it does not interfere with other users.
Greene added, “Over 50 potential customers have executed non-binding memoranda of understanding relating to the proposed space communications service, and EOS expects to finalise the initial constellation design soon so that those MoU can be progressively converted to service contracts after completion.”
“The company will face challenges building and launching a new constellation of MEO satellites by June 2024. Therefore, satellite capacity and the related funding requirements will be scaled to meet regulatory and customer commitments. EOS will later decide whether to implement the new satellite constellation on its own or through a partnership with an existing space communications entity,” Greene explained.
EOSDS is not required to make any initial material payment for the acquisition until completion as occurred. EOS will fund the $10 million required for the acquisition and related activities from the company’s cash holdings.
“EOSDS has been preparing for this acquisition for many months. We have already established a team of space communications specialists with, collectively, centuries of experience with satellite communications and space communications, including work on some of the largest space communications infrastructure projects undertaken,” Ambassador Barry added.
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