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Russia Just Made Elon Musk the Luckiest Man in Space – The Motley Fool

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How much does it cost to launch a Russian rocket? “Roscosmos, isn’t known for being transparent about its costs,” deadpanned German news agency DW in a 2018 article on the Russian space agency’s pricing of rocket launches. Nevertheless, a landmark deal among satellite operator OneWeb, Airbus (EADSY 1.18%) subsidiary Arianespace, and rocket provider Roscosmos shed some light on the Russian space agency’s pricing back in 2015.
In a contract Roscosmos called “the largest in the history of the provision of launch services,” OneWeb hired Roscosmos to supply 21 Soyuz rockets to put up to 700 communications satellites in orbit for $1 billion. (That’s about $47.6 million per Soyuz rocket). The companies further discussed launching even more satellites on three to 11 Roscosmos Proton rockets for between $300 million and $800 million (that’s anywhere from $72.7 million to $100 million per rocket).
Add it up. In total, Roscosmos stood in line to do 32 launches’ worth of work for OneWeb — that’s more rockets than SpaceX launched in all of 2021. This deal with OneWeb promised to make Roscosmos one of the most important launch providers in the world. More than that, at the prices being discussed, Roscosmos would become, arguably, the only rocket-launch provider offering prices low enough to compete with SpaceX. That would have been quite a victory for Roscosmos, a company whose fear of SpaceX and its low prices verges on paranoia.
Instead, Roscosmos has shut itself out of the international launch market — and handed a bonanza to SpaceX.
Image source: Getty Images.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” — Warren Buffet
The Russian war on Ukraine that began last month created a humanitarian tragedy and damaged Russia’s reputation internationally. It’s also possibly doomed the Russian space program.
On March 2, barely a week into the conflict, Roscosmos head Dmitry Rogozin tweeted an ultimatum to the British government (which, alongside India’s Bharti Enterprises Ltd., owns a sizable stake in OneWeb, according to data from S&P Global Market Intelligence). Roscosmos and Arianespace had already launched 13 sets of satellites for OneWeb so that the constellation was 66% complete as they geared up for their 14th launch on March 5. But Rogozin demanded that the U.K. first divest its stake in OneWeb and guarantee that OneWeb’s satellites would not be used for any military purposes — or Russia would refuse to launch the next batch of satellites.
Rogozin gave the U.K. two days to respond. Just one day later, OneWeb announced it was suspending cooperation with Roscosmos.
Rogozin responded in a statement through the TASS news agency, to the effect that (1) Roscosmos had already been paid for the launch, (2) it would not complete it, and (3) Roscosmos was keeping the money — and the satellites!
In effect, this amounts to a contract breach by Roscosmos, compounded by the appropriation of OneWeb’s funds — a double no-no in business circles and one that, as I pointed out at the time, would almost certainly cause other customers to reconsider doing business with Roscosmos in the future.
Indeed, that has already come to pass.
Yesterday, OneWeb announced that in light of Roscosmos’s failure to fulfill its contract, OneWeb will launch future satellite batches with Roscosmos’s archenemy instead: SpaceX.
We are pleased to announce that we have entered into a launch agreement with @SpaceX that will enable OneWeb to resume satellite launches.

The first launch with SpaceX is anticipated later this year.

Find out more about the announcement at: https://t.co/qvSAOIP04n pic.twitter.com/AMXHEvunAj

OneWeb announced no set date or price for this launch, but the language of the company’s press release, stating that it would “resume satellite launches [plural] through agreement with SpaceX,” strongly suggests that this is not a temporary stopgap measure. Rather, OneWeb will partner with SpaceX on future launches as well.
It’s hard to exaggerate how good this news is for SpaceX. Thanks to Roscosmos’s contract breach, SpaceX will now be launching satellites for a competitor and using OneWeb’s money to defray the cost of its own rockets. This will make SpaceX’s own Starlink satellite launches even cheaper, as the rockets depreciate, and the cost of each launch falls inexorably toward the cost of just the fuel to launch it.
And OneWeb pays SpaceX for the privilege!
SpaceX might not be the only company to benefit here, either. New Zealand’s Rocket Lab (RKLB -2.02%); American aerospace companies, including Boeing (BA -0.88%), Lockheed Martin (LMT -0.40%), and Northrop Grumman (NOC -0.09%); and even Arianespace in Europe, which uses its own Ariane rockets in addition to Soyuz and Proton rockets from Roscosmos. All these companies stand to benefit as Roscosmos exits the international market for commercial satellite launch.
Going forward, any work that Roscosmos might otherwise have bid on (and Roscosmos conducted 17 launches last year — three times more launches than Boeing and Lockheed’s United Launch Alliance completed) will now go up for bid by its international rivals.
Elon Musk should count his lucky stars. A lot of other space companies may be counting right along with him.

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Rich Smith owns Rocket Lab USA, Inc. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
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