Telesat Chief Executive Daniel S. Goldberg said he views the proposed merger of Intelsat and OneWeb as a clear validation of Telesat's own strategy of complementing its current fleet of geostationary-orbit satellites with a constellation of low-orbiting satellites. Telesat has scheduled the launch of two prototype satellites this year to prove technologies needed for the future 117-satellite constellation. Credit: Telesat Telesat Chief Executive Daniel S. Goldberg said he views the proposed merger of Intelsat and OneWeb as a clear validation of Telesat’s own strategy of complementing its current fleet of geostationary-orbit satellites with a constellation of low-orbiting satellites. Telesat has scheduled the launch of two prototype satellites this year to prove technologies needed for the future 117-satellite constellation. Credit: Telesat

 

PARIS — Satellite fleet operator Telesat of Canada on March 2 reported lower revenue and gross profit in 2016 compared to 2015, saying part of the decrease was due to its loss of frequency rights to rival Russian Satellite Communications Co. (RSCC) of Moscow.

Telesat said that 2016 also showed weakness in the energy and resource sector, where lower crude oil prices caused reduced activity and telecommunications demand from exploration and production sites.

In a conference call with investors, Telesat Chief Executive Daniel S. Goldberg said that satellite prices globally appeared to have stabilized in recent months after sharp declines in Africa and Asia and lesser declines in Latin America.

Telesat operates 15 satellites in geostationary orbit and by revenue is the world’s fourth-largest commercial fleet operator. It was also the first of the big GEO-fleet operators to announce plans for a low-orbiting satellite constellation for global Internet service.

Telesat says it has priority rights to Ka-band at the International Telecommunication Commission, the agency that regulates satellite orbital slots and broadcast frequencies. The company has asked the U.S. Federal Communications Commission (FCC) for a license to operate 117 satellites in two orbits — a high-inclination-orbit system at 1,000 kilometers, and a near-equatorial orbit at 1,248 kilometers.

Telesat said its combined polar-/inclined-orbit proposal was designed to appeal to the U.S. military. It also would appear to fit the requirements of the Canadian government’s Enhanced Satellite Constellation Project – Polar, which has yet to receive a budget.

For Telesat, OneWeb-Intelsat deal validates its LEO-GEO thesis

Goldberg said Telesat viewed the recent announcement that Japan’s SoftBank would invest $1.7 billion in Telesat rival Intelsat as part of a merger of Intelsat with start-up low-orbit satellite Internet provider OneWeb, in which SoftBank had previously announced a $1 billion investment, as an affirmation for Telesat’s own plans.

“It’s a smart investor who validated the value of a LEO architecture,” Goldberg said of SoftBank. “This is very consistent with what put us on the LEO path as a GEO operator. We see where demand is going, and where the technology is going with satellites and the ground segment, and we saw that pairing our GEO capability with LEO made a huge amount of sense.”

Telesat has two small prototype Ka-band satellites scheduled for launch in 2017 to test technologies for its future LEO constellation. The company has not announced any funding for the full constellation. The appetite for such a capital investment of Telesat’s two shareholders — Loral Space and Communications of New York, which wants to cash out of Telesat; and PSP Investments, a Canadian pension fund — remains unclear.

For the 12 months ending Dec. 31, Telesat reported revenue of 931 million Canadian dollars ($691 million),, down 3 percent from the previous year. After stripping away the effects of the strengthened US dollar relative to the Canadian dollar, the decline was 4 percent.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was down 4 percent, but a 7 percent decline in operating expenses helped raise the EBITDA margin to 81.9 percent of revenue, compared to 81.5 percent in 2015.

Backlog stood at 4.3 billion Canadian dollars as of Dec. 31, down 10 percent from a year earlier.

Telesat has two new satellites — the Telstar 18 Vantage over Asia, in which APT Satellite of Hong Kong has a 57.5 percent ownership stake; and the Telstar 19 Vantage over Latin America — scheduled for launch aboard SpaceX Falcon 9 rockets in the first half of 2018.

EchoStar Corp.’s Hughes division has leased Telstar 19 Vantage’s full Ka-band payload for 15 years as part of Hughes’s broadband expansion outside the United States.

Arrival of RSCC at 14 degrees West is costly

Telesat’s 2016 results reflect the loss of Ku-band capacity available for use at its 15 degrees west orbital slot. First affected was the Telstar 12, which has since moved to 109.2 degrees west; and more recently the new Telstar 12 Vantage satellite, which entered service in late 2015.

RSCC had a long-standing regulatory priority over Ku-band transmissions from just one degree away, at 14 degrees west, but was unable to place a satellite in that slot until the Express-AM8 satellite was launched in September 2015.

Telesat was obliged to cease using part of the Telstar 12 capacity before the satellite was moved, and to limit the broadcasts from Telstar 12 Vantage.

Telstar 12V and 14R satellites suffer on-board problems

In a March 2 filing with the U.S. Securities and Exchange Commission (SEC), Telesat said Telstar 12 Vantage has suffered “degraded performance” on four of its channels for reasons that have not been established but are believed to be tied to an on-board anomaly.

Built by Airbus Defence and Space, Telstar 12 Vantage was launched in December 2015.

Telesat said its Telstar 14R/Estrela do Sul 2 satellite, serving Brazil and Latin America from 63 degrees west, is now using its backup gyro to stabilize its Earth pointing after the primary gyro’s performance declined in late 2016.

Telesat said it is working on a ground-based solution to allow pointing without an on-board gyro, and that this solution should be in place in the first half of 2017.

The satellite, launched in 2011, was built by Space Systems Loral.

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Peter B. de Selding
Peter B. de Selding
Peter de Selding is a Co-Founder and editor for SpaceIntelReport.com. He started SpaceIntelReport in 2017 after 26 years as the Paris Bureau Chief for SpaceNews where he covered the commercial satellite, launch and the international space businesses. He is widely considered the preeminent reporter in the space industry and is a must read for space executives. Follow Peter @pbdes