The SKY and Space Global Ltd (ASX: SAS) share price has been amongst the big movers today after the exciting nano-satellite communication company announced that it had signed an agreement with the U.S. Department of Defense.
At the time of writing its share price is up 8% to 11 cents, bringing its year-to-date return to 31%.
For those unfamiliar with the company, Sky and Space Global plans to deploy nano-satellite constellations into orbit in order to provide global voice, instant messaging and data communication infrastructure, and services to the telecommunications and international transport industries.
The agreement with the U.S. Department of Defense is for the provision of Space Situational Awareness (SSA) services and information to ensure the safety of its nano-satellites.
The company believes the contract demonstrates the credibility of its management team within the international aerospace industry.
It is worth noting that this is not a revenue generating contract for the company.
Should you invest?
The global satellite market has been estimated to be worth $5 billion a year according to the Fairfax Media. Clearly there is a huge market opportunity for the company.
But it's still far too early for an investment in my opinion. If Sky and Space Global can revolutionise telecommunications infrastructure then it could have an extremely bright future, but until it has proven that it can, I think investors should keep it on their watch list.
For now I would suggest investors stick with traditional telecommunication companies such as Vocus Communications Limited (ASX: VOC) and TPG Telecom Ltd (ASX: TPM) instead.
