The Military/Government Satellite Market

By Elizabeth Tweenie

Los Angeles, Calif., April 2, 2025 - Defense and government have always been significant markets for the satellite industry, and if anything, that significance is increasing.  In the US in particular, this is partially due to the increasingly close cooperation and integration of commercial players into the Department of Defense (DoD) strategy.  In addition, in response to current geopolitical tensions and events around the world, globally, defense spending is on the rise.  At the same time, more regions and nations are prioritizing independent defense strategies, rather than rely on cooperation with others.  With the current US administration’s focus on an “America First” policy, this trend is likely to continue and probably accelerate.  

Most likely as a direct reaction to the new US focus, and possibly spurred on by the sudden (short term) cessation of information sharing and arms delivery to Ukraine by the US, that occurred at the beginning of March; the European Union (EU) has issued a new defense and rearmament policy known as ReArm Europe or the Readiness 2030 plan.  This plan is designed to deliver an increase in European defense readiness in order to deter any future attack from Russia, whilst at the same time, becoming less reliant on the US. 

At the moment both the US and the UK are excluded from participating, although general opinion seems to indicate that the UK will be included in some way in the future.  Kaja Kallas, High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission stated: “We are working on having this defense and security partnership with the UK.  I’m really hoping that by the summit in May, (when the UK and the EU are scheduled to discuss strengthening their ties) we can have results.”  When announcing this defense plan, Ursula von der Leyen, President of the European Commission said: “We must buy more European.  Because that means strengthening the European defense technological and industrial base.”  Historically, around 66% of EU procurement orders have been directed to US defense companies.

Seven priority areas considered critical to EU defense are specified. These include: 

• Air and missile defense. 
• Drones and counter-drone systems. 
• Military mobility, 
• EU-wide advanced electronic systems designed to a) protect and ensure the unhindered use of the electromagnetic spectrum for land, air, space and naval forces and operations; b) suppress, disrupt and deny the use of the electromagnetic spectrum by an opponent,
• Strategic enablers and critical infrastructure protection: including but not limited to Strategic
• Airlift and Air-to-Air refuelling aircraft, intelligence and surveillance, maritime domain
• awareness, use and protection of space and other secure communications assets and military fuel infrastructure
• Artillery
• Ammunition and missiles.

The first five rely heavily on space infrastructure.

Total budget for this plan is 800 billion euros (US$ 870 billion), 150 billion euros of which the EU hopes to borrow.  EU Countries can apply for loans through this program, known as Security Action for Europe (SAFE) until the end of 2030.  The EU has a AAA rating, meaning that it can borrow more cheaply than many individual European countries which have lower ratings.  The emphasis is on joint procurement.  Orders for equipment would have to come from at least two or more eligible countries, one of which must be an EU country receiving SAFE financial assistance.  The other may be another member state, an EFTA State, a member of the EEA or Ukraine.  The EEA is comprised of EU states, plus Norway, Iceland, Lichtenstein.  EFTA is comprised of those three countries and Switzerland

"...Space is now integral to any defense, and indeed offense, strategy.  Ground operations rely heavily on information delivered from space.  This could be surveillance of troop movements and obstacles delivered from earth observation (EO) satellites, or communications originating elsewhere in the theater of war..."

Although not expressly stated in the white paper announcing ReArm Europe, it has been reported that at least 65% of the equipment purchased with the loans will have to be for parts originating in the EU, European Economic Area (EEA),  European Fre  Trade Association (EFTA) or Ukraine.  Countries must also ensure that they have the option to replace components made outside of the EU with local equivalents, should the original producer decide to place restrictions on the use of the equipment.

The white paper also references expanding “mutually beneficial engagement and cooperation in the field of security and defence with all like-minded European, enlargement and neighboring countries (including Albania, Iceland, Montenegro, the Republic of Moldova, North
Macedonia and Switzerland) to promote peace, security and stability on our continent and beyond.”  Other countries mentioned for potential cooperation include: Japan, The Republic of Korea, India, Canada, Australia and New Zealand.

In its first report on Space Defense and Security, Novaspace (a merger between Euroconsult and SpaceTec Partners) forecasts that the global launch rate for defense and dual use (defense and commercial) satellites will grow by 160% in the ten years to 2034.  In 2023 a record 107 defense and dual use satellites were launched; this represents a massive 40% increase from the year before.  In the same report, Novaspace estimated that in 2023 worldwide government expenditure on space, defense and security reached US$ 58 billion, of which US$40 billion was contracted out to industry for manufacturing and launch of dual use satellites (US$ 24 billion), user terminals (US$ 3.3 billion), operation of government systems and sale of data (US$ 10.2 billion) and provision of managed and value-added services (US$ 2.7 billion).

Space is now integral to any defense, and indeed offense, strategy.  Ground operations rely heavily on information delivered from space.  This could be surveillance of troop movements and obstacles delivered from earth observation (EO) satellites, or communications originating elsewhere in the theater of war.  In addition, space itself now has the potential to be a war zone, as countries develop satellites capable of not only spying on other satellites, but also destroying them (Anti-Satellite (ASAT) capability).  

Other key applications for military satellite communications, include: early warning and missile defense, intelligence, surveillance and reconnaissance (ISR), global force connectivity, provision of resilient networks able to withstand cyber-attacks and jamming, provision of space-based positioning, navigation and timing (PNT) capability for navigation and missile guidance.

Read or download a MarketBrief report on the Military Satellite market at: https://satellitemarkets.com/pdf/pdf2025/Military-Market-Brief-2025.pdf

The US has the world’s largest budget for space, defense and security, accounting for US$ 38.9 billion of the global US$ 58 billion expenditures in 2023. Nevertheless, widespread cost-saving efforts across US government departments, leave the Department of Defense (DoD) with a lack of clarity as to precisely where and when the cuts are going come. To quote a recent headline in the Federal Times “Uncertainty is the only constant in the Pentagon’s budget outlook.”  The DoD has been ordered to cut its 2026 budget request by approximately US$ 50 billion, in order to allocate the money to “new priorities.”  Right now, neither where the US$ 50 billion will come from, nor what the “new priorities” are is clear.  However, it is likely that the Golden Dome will be one of the new priorities.  This is an ambitious project to create a missile defense architecture covering the entire United States, similar to Israel’s Iron Dome.  The Golden Dome is intended to be a comprehensive defense system, protecting against ballistic, hypersonic, advanced cruise missiles and drones.  By definition, this project will rely very heavily on space assets, so as long as this project remains a priority, it’s safe to say that defense spending on space is likely to continue.  

At the time of writing, there is no clear public information as to what form the dome will take, nor how much it will cost.  Concerns have been expressed that one of the major challenges, will be that of organization and establishing a clear chain of command.  Following a recent planning session, which included the Missile Defense Agency, the National Geospatial-Intelligence Agency and the National Reconnaissance office as well as representatives from the armed forces, General Michael Guetlein, Vice Chief of Space Operations, commented: “They were all present in that room talking about what it is going to take to get after something of this magnitude…..That’s how complex this capability is going to be.  But it’s not complex because the technology is going to be hard.  It’s complex because of the number of organizations and a number of agencies that need to be involved.”   The Golden Dome has been compared in size and scope to the Manhattan Project.  This was the project that produced the first atomic bomb.  It cost around US$ 2 billion by the time of its completion in 1944, equivalent to around US$ 33 billion in 2025 dollars.  The Pentagon is scheduled to deliver a recommendation on the Golden Dome at the end of March.

Returning to that headline in the Federal Times, whilst an increase in spending on space and space related assets for defense seems certain, given the new European strategy, which countries and companies are going to be the major beneficiaries of those orders, is very uncertain.  

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Elisabeth Tweedie is Associate Editor of the Satellite Executive Briefing and has over 20 years experience at the cutting edge of new commmunications entertainment technologies. She is the founder and President of Definitive Direction (www.definitivedirection.com), a consultancy that focuses on researching and evaluating the long-term potential for new ventures, initiating their development, and identifying and developing appropriate alliances. She can be reached at: etweedie@definitivedirection.com