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Space is a strategic priority under Saudi Arabia’s Vision 2030 strategy to help diversify its economy away from hydrocarbons and toward technology and innovation.
Backed by the Public Investment Fund, a sovereign wealth fund managing more than $925 billion in assets, Neo Space Group (NSG) is at the center of this effort, targeting defense and commercial customers worldwide amid Saudi Arabia’s broader shift from a government-run to a market-based economy
NSG has grown to nearly 800 employees in just 18 months since its launch, largely through acquisitions such as the German UP42 geospatial data platform from Airbus and, most recently, Display Interactive, a French provider of in-flight entertainment and connectivity solutions.
SpaceNews‘ Jason Rainbow caught up with NSG CEO Martijn Blanken to dig deeper into priorities he outlined during a Sept. 16 fireside chat at World Space Business Week in Paris. Blanken discussed NSG’s acquisition strategy, capital allocation to orbital assets and the role of sovereign demand in guiding space investments.
SpaceNews: You recently said NSG is still evaluating whether to allocate capital to space assets. Where do those deliberations stand today?
Blanken: They’re progressing, but it’s intrinsically linked to sovereign demand in the Kingdom of Saudi Arabia. We’re in the process of determining exactly how much demand there is, by when and how we are best going to meet that demand in the years to come. We’re hoping that in the next 12 months we’ll come to a conclusion, and then we can start to make informed decisions.
What criteria will ultimately decide whether NSG builds, buys or partners for new space infrastructure?
The first thing is a clear demand signal. How we go about meeting that demand is almost a third-order question. On one end of the spectrum, the government of the Kingdom could procure and own the asset, and we operate it on their behalf, with permission to commercialize excess capacity.
On the other end, we could make the investment and own and operate the asset ourselves under an off-take agreement. There are also public-private partnership models in between. We’re not really fussed either way. It depends on the wishes of the government, and our job is to inform them properly so they can make a well-informed decision.
But you have made other acquisitions. What areas are on your acquisition or partnership roadmap?
The aim of the company is to build up the best possible understanding of what customers actually want. To do that, you need to serve them directly — what we refer to as downstream activities. The Display Interactive acquisition squarely fits into that, giving us a compelling software-defined traffic management platform to provide services to airlines and potentially other mobility players.
We’ll continue looking at other verticals. Aviation was the first, but we’re also actively considering others, both organically and inorganically. The same is true for geospatial, where our acquisition of UP42 boosted capabilities earlier this year. These downstream activities also help inform what to do in the midstream, where we own and operate the assets.
How far can your Skywaves software-defined traffic management system offset the need for owning capacity outright?
Ultimately, it depends on what you sell and what you provide to your customers.
Think of it like Wi-Fi in hotels: 30 years ago it was a novelty, now it’s a given. Same with airlines, which have to decide whether they provide connectivity free, at a cost or part of a premium offering.
The Skywaves platform allows them to customize connectivity and passenger experience. Such as recognizing frequent flyers, remembering unfinished content and integrating with merchant platforms, while intelligently routing traffic between different orbits to optimize cost and performance.
NSG is part of SES’ Open Orbits Alliance. Is multi-orbit neutrality your long-term differentiator, or will you eventually anchor on sovereign capacity?
The differentiator is providing the best possible passenger experience, but multi-orbit capability is key to that. You need alternatives where some low Earth orbit (LEO) providers don’t have landing rights.
If you want to fly to China, there’s a good chance that the American LEO providers may not get lending rights in that country.
The last thing a passengers should be worried about is what connectivity from what provider. All they care about the experience, and being able to provide multi-orbit options globally is a prerequisite.
You’ve described Earth observation as highly fragmented. What role do you see for NSG in consolidating this market internationally?
The consolidation is more about making it easier for users. Today, if you’re a forestry organization, for example, you need to figure out where to go, what kind of imagery you need — optical, hyperspectral, radar — and which operator to approach. By consolidating all supply in a marketplace, you make it easier for end users or service providers to get what they need without having a PhD in remote sensing. That simplification can boost usage overall.
How do you weigh expanding in imagery and aviation connectivity against other opportunities such as Internet of Things (IoT) or direct-to-device?
It all depends on customer demand. As a national champion, we aspire to fulfill a material portion of the Kingdom’s sovereign demand within, say, five years time. That is not 100%, but certainly a lot more than 10%, so let’s say somewhere in between.
To do that, we’ll need to invest in space assets, but also make excess capacity available commercially to get the best return. IoT is under consideration, though I don’t see it as a standalone constellation. Over time, it will likely be a payload on a spacecraft carrying other missions. IoT is a spectrum play and we don’t own much spectrum at the moment.
We’re a year and a half old. There’s only so much you can do that quickly, so we’re building expertise step by step.
You’ve said you’re skeptical about direct-to-device. What proof points would change your view?
Nobody really knows how big that market is, or how much consumers will pay for incremental coverage outside terrestrial networks. It’s a given that the cost per megabit on terrestrial networks will be substantially cheaper. The big question is, what is the value of getting that incremental coverage? Is $5 a month, $15 a month? Well, for somewhere like Burundi in Africa, I doubt it will be multiple dollars a month, whereas in the U.S. it might be.
The economics are also to a large extent driven by spectrum, whether you rely on mobile network operators or own spectrum outright. The value of spectrum has shifted dramatically, as recent transactions showed.
How much of D2D do you see as consumer-driven versus sovereign/defense?
In terms of value, I suspect the sovereign market is material. For defense and intelligence, D2D is super important and can be easily organized within one country because regulators can simply decide what they do with the spectrum in that particular country. But that may conflict with consumer use, as spectrum allocated to defense might not be available for consumers.
Even though defense and intelligence may not be using it, or just a fraction of it, it still can be deemed so important that there’s very limited spectrum available for the consumer market.
You’ve flagged key investment decisions in the next 12 months. Are there deadlines we should look out for?
I think you don’t have to be a rocket scientist to figure out that the geopolitical tensions are not diminishing at the moment. They’re rising. So the need for sovereign capabilities across the globe is increasing. Saudi Arabia is not an exception to the rule, and the country wants to build up in-house expertise and reduce dependence on foreign companies, while still partnering internationally.
NSG has been set up to do exactly that. If in the next 12 months, we don’t have any further clarity on how exactly we’re going to get be allocated capital, I’d be a little bit disappointed — let’s put it like that.
And what is the size of the capital that could potentially come your way?
A big geostationary satellite is a couple of 100 million dollars, but you can also meet the same demand in a different way with a couple of smaller satellites. Still, we’re talking about material amounts of money. I cannot give specific numbers, but if you want to have a degree of sovereignty, that means that it is going to cost you money.
The alternative is you spend less to buy it off the market, but then you don’t control anything. I don’t think it’s super important how much it’s going to cost. It’s more the fact that the Kingdom will have a path to have a degree of control over its its own future.
Space is an intrinsic part of the defense and intelligence community. It was in the past, but it’s going to be even more so in the future.
Where do you expect NSG’s revenue mix to come from in five years?
By the end of the decade, it would be fair to say that we probably would have a few space assets up and running, and that will be heavily linked to the sovereign component.
Today, geospatial generates more revenue than satcom, but both will be strong pillars of the business. Satcom is a larger market, so it stands to reason that will be reflected in our portfolio over time.
Anything you’d like to add on the outlook?
Saudi Arabia’s space economy is modest today — the aim is to grow that quite substantially, but the talent pool is relatively shallow compared to other countries.
So alongside making informed investment decisions, much of our work is organizational, leadership and talent development. Ten years ago this was pretty much a government-run economy; now it’s transitioning quickly to a market-based one.
Western economies have been operating as market-based economies for the last 200 years, with a lot more things that have been institutionalized that are in the process of being institutionalized in the Kingdom.
That’s a bumpy ride, but the trend is very positive and it makes building NSG both complex and fun.
This Q&A has been edited for clarity and length
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