Credit: Maxar

PARIS — Satellite fleet operators including Eutelsat, Intelsat, SES, Telesat, Nilesat, Hispasat and the government of Nepal are conducting “final” reviews of satellite bids submitted by industry, and the wait is torturing the satellite manufacturing sector.

Right behind the satellite builders are the commercial launch service providers, waiting for the same thing.

“I have never seen the market like this,” said one industry veteran. “Normally when people talk about an order pipeline, they mean things are moving through the pipe. But now, everything seems stuck there.”

The latest company to say “ouch” is Thales Group, whose Thales Alenia Space division had already been singled out for poor performance by Thales management in September and badly needs new orders.

Thales revises downward its expected 2019 space revenue

Thales on Oct. 17 revised downward the revenue expected from Thales Alenia Space this year, saying the recovery in the commercial satellite telecommunications market is coming more slowly than expected.

Thales had told investors in September that it expected a 10% drop in space-division revenue in 2019 from the 2.45 billion euros ($2.8 billion) reported in 2018:  It now expects the decline will be 13%.

“The hesitation of telecommunications satellite operators continued in the third quarter, resulting in fewer orders than expected, and this will have only a minor contribution to fourth-quarter revenue,” Thales said in an Oct. 17 statement. “For the full year, the group thus expects a revenue decline of around 13%.”

Thales remained nonetheless relatively optimistic for the market’s medium term, saying that four “substantial” orders are expected to be made before the end of the year, “confirming the progressive recovery of this market.”

Thales did not say it expected to win four orders, only that it had submitted what it considered competitive bids. The company likely did not include Telesat’s expected selection of a prime contractor for the Telesat LEO constellation of broadband satellites. Thales Alenia Space and Maxar Technologies have teamed for the work in competition with Airbus Defence and Space.

Similarly, Thales Alenia Space — 33% owned by Italy’s Leonardo — is also battling Airbus for the SES Next contract, likely an order for three or four satellites that SES will use in the future. Inmarsat made a similar choice earlier this year with a three-satellite order with Inmarsat of London.

The market’s hesitation is due to two factors. The first is the softening demand, especially in the United States but starting elsewhere, for satellite television. SES and Intelsat are both heavily exposed to this in the United States.

Eutelsat has said its emerging-market positioning will help mitigate any declines in Europe, and that the number of global television channels is still growing.

The second, related to the first, is the prospect of broadband constellations of satellites in low- or medium- Earth orbit and what these might do to demand for capacity from geostationary-orbit satellites.

Thales said it remains hopeful that government budgets for satellite programs remain robust, and that military space spending will grow, as will demand for satellite broadband.