Kuiper spending $10B on launch alone

Amazon’s launch costs for Project Kuiper, its constellation of ~3,200 broadband satellites, are much higher than initially estimated, according to a recently surfaced SEC filing.  

The internet giant signed launch deals covering a firm 68 rockets – 38 missions on Vulcan rockets from ULA, 18 missions with the Ariane 6 from Arianespace, and 12 New Glenn rockets from Blue Origin with contract options for 15 more – in spring of 2022. At the time this was believed to be a $5-6 billion deal, with discounts for bulk orders, new rockets and filling the backlogs of launch-starved companies. Turns out that was not the case.  

In the disclosure, Amazon said it “expects to pay approximately $7.4 billion for satellite launch and related services through 2028” to Blue Origin and an unnamed third party.  

Amazon is required to disclose purchase agreements between founder Jeff Bezos and his other companies, a rule that led Amazon to share launch pricing info for Blue Origin (which Bezos owns) and which ID’s the third party as United Launch Alliance (which is buying engines from Blue Origin). Of the $7.4 billion, some $2.7 billion goes to Blue Origin. The remaining $4.7 billion, by process of elimination, goes to ULA.  

Since Bezos has no stake in Arianespace, Amazon was not required to share the size of that purchase, however Arianespace has described it as “the largest we’ve ever signed.” Quilty Space estimates that value of the Arianespace contract is $2.5-3 billion, inclusive of upgrades to the Ariane 64 solid rocket boosters that are needed to fulfill the mission.  

Altogether, these three contracts cost about as much as Amazon had initially pledged to spend on Kuiper, and mean the actual price tag for the Gen-1 constellation will be considerably higher when including satellite manufacturing, ground station deployment and user terminal production.  

Launch contracts are typically front-loaded, and Amazon’s are no different. The company has paid “approximately $1.7 billion under the agreements,” of which ~$585 million went to Blue Origin. Counting Arianespace, Kuiper has undoubtedly paid more than $2 billion for launch without placing a single satellite in orbit. And recurring delays with all three vehicles mean a steady launch rate is unlikely until late 2024 at the very best, a timeline that constrains Amazon’s ability to meet FCC regulatory deadlines. The company has until July 2026 to deploy half of Kuiper (1,618 satellites) and the full constellation by July 2029. Falling short of these milestones caps Kuiper at the number of satellites launched by whichever deadline is missed. 

SOURCE: https://twitter.com/breadfrom/status/1681013367559913474