Elon Musk’s creation of Starlink, a network of 4,500 satellites in low-earth orbit that provide fast internet service to subscribers, has proven to be a huge success and has spawned numerous attempts to enter that same market, buoyed by the fact that the cost of building and launching a satellite has been falling rapidly--largely because of Musk’s SpaceX.
While it may be more tractable today than it was a decade ago, creating a satellite internet service remains a prodigious technical and financial task, requiring billions of dollars and considerable expertise in the field.
However, it appears that a company called Rivada Space Networks will be attempting to do such a thing without much of either of these. Whether it can succeed is highly questionable.
Rivada Space Networks is the German subsidiary of Rivada Networks created to manage its satellite business. Rivada Networks is a U.S.-based telecommunications company that has been in existence for nearly two decades with little to show for the millions of dollars it has raised from investors to create a game-changing telecommunications network.
Rivada has adopted a strategy of partnering with former Republican political officials and soliciting their help in lobbying the government to obtain lucrative government contracts. Karl Rove (who is also an investor), former House Speaker Newt Gingrich, and a former chairman of the Joint Chiefs of staff tried to help the company partner with the Pentagon in a project that entailed borrowing some of the Defense Department’s unused spectrum and directing it for private use. The attempt to receive a no-bid contract to build a 5G network failed and in the aftermath the company sued CNN for allegedly defaming them for reporting on its proposed plans. Rivada then pivoted to its latest space gambit.
Created in only March 2022, Rivada Space has successfully wrestled lucrative spectrum rights from a Liechtenstein company controlled by Chinese investors, convinced the International Telecommunications Union to waive deadlines related to deploying a complex network of satellites, and has allegedly raised millions of dollars to make this a reality.
To develop its satellite network, Rivada has signed a $2.4 billion contract with Terran Orbital Corporation to have it build satellites that would constitute the basis of a super-fast network, once deployed in a low-earth orbit. While Terran is backed by major defense contractor Lockheed Martin, the Rivada contract accounts for almost all of the satellite manufacturer’s orders. Earlier this year Rivada also signed a contract with Elon Musk’s SpaceX to have it launch 300 satellites into space beginning in early 2025. The Liechtenstein licenses are crucial to creating such a network.
Without a government contract or promised telecommunications network, the company languished and found itself in financial trouble. It has faced legal action over at least two defaulted loans from shareholders in federal and state courts. In February 2023 its CFO testified in a deposition that it had just $3,000 in the bank. He also revealed the company has regularly missed payroll, has not received any revenue since 2015, and owes tens of millions of dollars to vendors. Earlier this year it was forced to make a $3.1 million payment to avoid having the Rivada Space Network effectively transferred to a debtor to satisfy a debt.
After years of missed payrolls and a lack of a viable product, the company has pinned its hopes on an enormous new moonshot to save the company. In the same deposition the CFO revealed that while Rivada had raised $22.5 million in 2022, almost all of that money had already been spent on general company operations. It is unclear how the company will raise the billions of dollars needed to build the satellite constellation.
When asked about the sources of Rivada’s capital sources and ability to make payments during its May 2023 earnings call, Terran’s CEO said the company was respecting an NDA it had signed. Similarly, Rivada has asserted it has received a cash infusion to alleviate its cash flow issues without providing any details.
The number of things that Rivada must put together in this relatively short period seems daunting, and its ability to succeed in each of these arenas is in doubt, especially given its lack of a track record in the satellite market. Its politically-connected board members may be able to help it navigate bureaucratic hurdles, but it’s not clear it can help it raise the billions necessary to remain solvent, let alone build, launch and operate hundreds of satellites.
