KT Group's satellite subsidiary KT SAT has seen its plan to enter the Asian market by combining a medium Earth orbit satellite network with its existing geostationary satellites fall through. The move comes because Mangata Networks, the U.S. satellite communications startup selected as its strategic partner, has entered liquidation due to worsening finances.
According to a compilation of ChosunBiz reporting on the 27th, Mangata's recent entry into liquidation has reduced to 0 won the book value of KT SAT's 4.8% equity stake in Mangata, which had been 4,763,200,000 won. KT SAT's Mangata bonds it had purchased, worth 6,140,000,000 won, were also written down to 0 won. The combined loss on the equity and bonds totaled about 10.9 billion won, all recognized as an impairment loss.
A KT SAT official said, "Due to Mangata's worsening finances making normal operations impossible, we reflected a full impairment loss on the investment assets," adding, "Mangata is currently undergoing liquidation."
The target of KT SAT's investment was U.S.-based Mangata Networks. Founded in 2020, the company aimed to deploy communications satellites in medium Earth orbit (MEO) and highly elliptical orbit (HEO), and connect them to ground data centers to provide satellite communications and cloud services. In January 2022, KT SAT joined Mangata's $33 million Series A round, worth about 48.3 billion won. Through this, KT SAT acquired a 4.8% equity stake in Mangata and invested not only in equity but also in bonds issued by Mangata. Mangata was not a simple financial investment target but a strategic partner chosen for KT SAT, which had focused its business on geostationary satellites, to enter MEO services.
In 2023, KT SAT also signed a contract to purchase communications capacity on the MEO satellites Mangata would build. Instead of building its own MEO satellite network, it planned to cut expense and time by leveraging Mangata's satellites and start satellite communications services in Indonesia, Malaysia and India from 2026.
However, Mangata failed to secure a follow-on Series B investment and struggled to raise the funds needed to build its satellite network. In 2024, citing rising expense and supply chain issues, it scrapped a plan to build a satellite manufacturing facility in Scotland, U.K., worth about £84 million. Its financial situation then deteriorated, leading to the recent start of liquidation proceedings.
Accordingly, the satellite capacity purchase contract KT SAT signed with Mangata is no longer being performed. A KT SAT official said, "At this point, launching services via Mangata's MEO satellites is impossible," adding, "KT SAT has no prepaid amounts paid for satellite communications capacity purchases or contractual obligations that must be paid going forward."
Some say KT SAT moved too hastily in selecting an early-stage company—whose commercial viability and profitability were unproven—as a core business partner and investing in both equity and bonds. At the time of investment, Mangata was an early-stage startup with no revenue and no commercial satellite network. To actually build and launch satellites and start commercial service, large follow-on fundraising needed to continue. Even so, KT SAT simultaneously invested in equity and bonds, signed a satellite capacity purchase contract, and locked in a 2026 commercialization timeline and Asian market entry plan predicated on Mangata.
A telecommunications industry official said, "With this incident, KT SAT not only recognized a full impairment loss on 10.9 billion won worth of investment assets, but also lost its MEO business partner, with whom it had finalized investment, a satellite capacity purchase contract and a commercialization timeline," adding, "KT SAT's multi-orbit strategy itself has not been halted, but it must redraw its Asian market entry plan and find a replacement for Mangata."