The Israeli government has announced its intention to purchase a satellite from Israel Aerospace International (IAI). The announcement is a severe blow to Spacecom Satellite Communications Ltd. Spacecom announced a month ago that it would buy its Amos-8 satellite from a European based company and not Spacecom.

Spacecom chose Loral to build the satellite that will launch in 2020. The launch provider for the satellite is SpaceX. IAI made all the Amos 8 Satellites that Sapcecom launched previously. Spacecom’s decision to buy from the European space market threatened the future of IAI. IAI took another step after losing out on the contract to build a satellite for Spacecom.

Earlier, IAI revealed its intention to apply for a license from the Department of Communications. The idea is to ensure efficient allocation of the government budget. It will also help to encourage and preserve knowledge in Israel’s space industry.

The company announced that it intends to build its satellite for the government. The government in the early hours of April 30, 2018, announced that it would operate satellites at 4⁰W, the location where Spacecom operates its satellites.

According to Spacecom, the decision to buy from Loran was as a result of time constraint. They had already contracted IAI to build four satellites, and IAI is unable to meet short deadlines.

The news of IAI building satellites for the government has put Spacecom in a problematic situation. The company’s Amos 6 blew up just eighteen months ago when it blew up in the process of mounting. SpaceX’s Falcon 9 was the launch vehicle that was launching the satellite at that time. The satellite had powerful payloads that supported several frequency ranges.

The strategy will also generate revenue for the state-owned company, IAI. Although the direct effect of the government’s decision on Spacecom’s recent contract with Loran is not apparent, Spacecom is definitely in a fix since the company did not see this coming.

Spacecom has up to 60 days to cancel its contract with Loran without suffering any penalties. After that period, they would have to incur certain fees. The 60 days start from the first day Spacecom signed the contract with Loran. Evidently, Spacecom has less than 60 days to make a decision.

It is unclear whether Spacecom would cancel the $112 million procurement order or not. The government’s decision is in line with its plan to support satellites built domestically.