IRIS2 Survived. Now it will reshape Europe’s satcom sector

Constellations are never quick, and Europe’s IRIS2 is no exception. After four years in planning purgatory, the European Commission surprised no one Oct. 31 by selecting the SpaceRise Consortium led by Eutelsat, Hispasat and SES to create the secure, multi-orbit government communications network of ~290 satellites. There wasn't really any competition – Europe’s three largest satellite operators and three largest satellite manufacturers (Airbus, Thales Alenia Space, and OHB) were all part of the same bid. Within two months, a contract should be signed, and cost/performance targets should (hopefully) be disclosed. Citing anonymous sources, Space Intel Report reported that Eutelsat will contribute €2 billion to the program while Hispasat and SES will contribute approximately €1 billion apiece.

When it was first proposed in early 2020, the IRIS2 program had no clear purpose beyond establishing a European counterweight to American, Canadian, and British investments in LEO constellations. Russia’s invasion of Ukraine two years later transformed the debate, however, as it became apparent that Europe’s traditional GEO architecture could not measure up to Starlink’s battlefield success.

Despite widespread general support, IRIS2 also attracted plenty of criticism and was forced to navigate at least three blows, any of which could have been fatal to the program.

- Airbus and Thales Alenia Space rescinded their offer to financially support the consortium this summer, shrinking the private sector contribution.

- Germany fought against IRIS2, citing a doubling of costs from €6B to nearly €12B, and;

- Thierry Breton, the EC commissioner who championed IRIS2, resigned suddenly in September.

Meanwhile, SES, Eutelsat, and Hispasat have continued investing in their next-gen satellite systems while awaiting approval of IRIS2. This includes SES’ acquisition of Intelsat, which will clearly limit SES’ investment in IRIS2. While the full implications for each company will become clearer as IRIS2 matures, here is how Quilty Space views the EC’s decision affecting all three so far:

Hispasat. As the smallest operator of the three, Hispasat arguably has the most to gain. The Spanish regional operator long deemed a solo LEO constellation too expensive. The company invested in startup LeoSat in 2018, but the venture collapsed in 2020 after failing to find additional supporters. IRIS2 would provide Hispasat with a multi-orbit solution while also boosting the prospects for Spanish vendors seeking to participate in the program, as Hispasat often weaves domestic hardware companies into its supply chain for satellite procurements.

SES. With around 70 satellites spread across MEO and GEO orbits, SES is Europe’s largest satellite operator and the world’s only (organic) multi-orbit operator. Thus, IRIS2 appears to be a “medium” win for SES that could turbocharge existing programs. The company is planning a proliferated MEO constellation that management recently said it would build “with or without” IRIS2. If the pMEO constellation is executed in tranches, as currently envisioned, the EC could finance a portion of this network. Prior to the IRIS2 announcement, Quilty Space estimated that SES adding a megaMEO would likely require incremental capex of $500-$700 million on top of our ~$700 million forecast (2026-2028). 

Eutelsat. IRIS2 once appeared like it could be OneWeb’s second generation of satellites, but the EC’s timeline suggests that won’t be possible, at least not without a continuation of Gen-1, or an interim generation to bridge the gap. The EC’s goal is to have IRIS2 in service by 2030, which is too far out to serve as a bridge from OneWeb Gen-1. Most of Eutelsat’s OneWeb fleet launched from 2021-2022, with satellites designed for seven years. Unlike Iridium’s Gen-1, these satellites are not expected to materially surpass their design lives, meaning Eutelsat can't wait until 2030 to get replacements in orbit.

Quilty Space will conduct a deeper study on IRIS2 after the EC signs the manufacturing contract and when more details are released about the constellation’s architecture.

SOURCE: https://defence-industry-space.ec.europa.eu/iris2-european-commission-awards-concession-contract-spacerise-consortium-2024-10-31_en