Local satellite company Sunspace is not on the verge of collapse, as media reports have indicated. However, an expected investment by government would help pad its capital-intensive business.
Speaking to ITWeb this morning, Sunspace business development director Ron Olivier explained the company's primary need for a government investment is more a reputational issue than a financial one.
Reports surfaced last week that the company is nearly broke, and required an expected investment from government to keep afloat. However, Olivier says that, while it does need a financial boost, it would as easily accept a government endorsement as a financial investment.
Piece of pie
Sunspace has been an integral player in SA's aerospace industry. The firm's most recent success is the development of SA's second national satellite, SumbandilaSAT, which recently took to the skies and is providing geographical imaging for research purposes.
Earlier this year, Cabinet approved a request by the Department of Science and Technology to buy out an equity share of between 55% and 60% in the business, sparking speculation and criticism from a range of industry watchers. The estimated value of the stake lies in the region of R100 million.
But why?
“A space industry, while an exciting opportunity for our scientists and engineers, should not be a priority in tight economic times, while the South African public purse is under pressure to fund infrastructure, health and education demands,” she added in a statement released last week.
Olivier says Sunspace is sitting with a catch-22 scenario. “In our industry, business is usually conducted in a government-to-government manner, with the other players primarily owned and developed by governments in their countries.”
He says it takes government backing to build a reputation in the industry, and build possible contract partners' trust. “Unless government has a hand in the business, many people question the longevity of industry players,” he explains.
Not saying no
Without that investment, Sunspace could have a hard time finding the contracts it needs to survive as a viable business, especially considering its small size. Olivier says having government invest would help it allay fears that it will not be around to complete long-term contracts.
However, Olivier says a financial investment would go a long way to help the business cope with the demands of the industry, while still maintaining research and development. “It is a capital-intensive business and often contracts can take up to 10 years to finalise. With an investment from government, we can still continue development and not release products that are too far behind the rest of the world.”
Science and technology minister Naledi Pandor, in a recent interview with ITWeb, indicated that she intended to boost SA's space industry and expected Sunspace could play a major role in that development.
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