Europe we have a problem: shared satellite venture is still a giant leap away
PARIS (Reuters) -Europe's drive to create a satellite manufacturing champion is taking longer than planned, and debates over costs, competition policy and who might participate could continue to hamper progress despite French calls for greater urgency.
Under so-called "Project Bromo", named after an Indonesian volcano, Airbus, Italy's Leonardo and France's Thales are looking at creating a joint space company to better compete with China and Elon Musk's Starlink.
The move is part of a broader attempt by the region to boost sovereign capabilities in areas from defence to finance amid heightened geopolitical tensions and shifting U.S. policies.
But progress has been modest, prompting French President Emmanuel Macron on Friday to try to inject fresh impetus into the process.
There's no time to lose.
Demand in the commercial satellite market is shifting towards low Earth orbit constellations like Starlink's - which offer better signal strength, lower latency and wider coverage than traditional geostationary satellites - and European firms are scrambling to keep up.
And there are many challenges to overcome, executives at the Paris Airshow warned last week.
"In this sector, Europe has missed quite a few trains. There is much to do, so we must be patient. There are a lot of layers to it," said Leonardo CEO Roberto Cingolani, a staunch supporter of cross-border alliances.
Even the potential make-up of the alliance is not yet clear.
As talks proceed, France and Italy are now also considering reaching out to Germany and Spain in order to achieve the greater scale needed to push down high manufacturing costs.
Italy's Defence Minister Guido Crosetto said it wasn't "about politics, but rather industrial capacity", adding that Europe's space industry needed to be more cost-competitive.
"What is needed is clear, it's investments. These are key for the European and French industry," added Benoit Hancart, head of institutional relations at Thales Alenia Space.
PRELIMINARY PHASE
Airbus, Leonardo and Thales are looking to assess the feasibility of a partnership by July, Cingolani told reporters at the air show, although people working on the deal say it could take longer.
The possible alliance aims to pool the space assets of the three companies together in a way similar to European missile maker MBDA, jointly owned by Airbus, Leonardo and Britain's BAE Systems.
The current joint ventures between Leonardo and Thales - Thales Alenia Space and Telespazio - are likely to be pulled in too, but a clear business plan has not yet been laid out.
Leonardo Chairman Stefano Pontecorvo told Reuters that the parties were still at a "preliminary phase, with still many numbers that need to be seen".
Despite the early stage, the three groups have already started preliminary talks with European Union antitrust regulators, in what is known as a "pre-notification phase".
Like Airbus, Pontecorvo called on EU regulators to take a broad view of the competitive landscape, hoping they would not make "the fundamental error of applying the same mechanisms of the internal market to the defence and space industry".
"While consumers must be allowed to have a wide choice and be able to get the best deal possible, in high-tech, high-investment sectors like space you have to create European champions that are able to compete," Pontecorvo said
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