GEO order drought bottoming out, Maxar Technologies says

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Canada won't permit Maxar to sell data from the newest Radarsat satellites.

WASHINGTON — The unusually low order rate among the world’s telecom satellite operators for geostationary satellites appears to have stabilized at about half the historic norm, according to Maxar Technologies.

Maxar’s projections of eight to 12 orders industry-wide for 2018 are holding as the first half of the year nears completion, according to Maxar Chief Executive Howard Lance. That is a far cry from the “nominal level of around 20 awards,” he said, but looks to be the new norm as operators grapple with what their next-generation systems should look like.

In a May 9 earnings call, Lance said Maxar’s Space Systems Loral satellite manufacturing division should win three to four telecom spacecraft orders this year if it achieves a 30 percent win rate. SSL has clinched two orders since the first of the year: BSAT-4b for Japanese operator BSAT and Amos-8 for Israeli operator Spacecom.

Like the leaders of the world’s other top satellite manufacturers, Lance said the number of geostationary satellite orders has lost its value as a metric of success, with dollar amounts per order being the more important criterion. As high-throughput satellites employing numerous spot beams for broadband connectivity gain popularity, their complexity can drive prices up well above simpler television broadcast spacecraft. SSL President Dario Zamarian said at World Satellite Business Week in September that the Jupiter-3 satellite contract SSL won from Hughes in 2017 was worth two to four times a typical satellite order.

Maxar has “not yet won what you might call a big award, a single award worth hundreds of millions of dollars,” Lance said, but “those are absolutely in the pipeline.” Multipurpose satellites featuring a mix of broadcast and broadband payloads are also coming into vogue, he said.

“We see an increased focus on what we’re calling hybrid satellites, such as the one that we booked for Embratel Star One in Brazil, which has the capability to provide both direct to home video and broadband capabilities for data,” he said. “We think more customers rather than less are looking at those kinds of satellites. Those have a little more complexity, so slightly higher prices.”

Star One D2, a 6,200-kilogram satellite ordered from SSL in October for a 2019 launch, will carry commercial C-, Ku- and Ka-band transponders and a military X-band payload.

Maxar’s Space Systems segment, which includes SSL and some MDA Corp. business lines, saw a 14 percent drop in revenue year over year, generating $293 million for the first three months of 2018. Small satellite and U.S. government work grew 92 percent, but was not enough to fully counter the declines in geostationary business and the wind down of the Canadian government’s three-satellite Radarsat Constellation Mission (RCM), due for launch this year on a SpaceX Falcon 9 rocket.

Revenue from Maxar’s other half, which includes the DigitalGlobe optical Earth observation business and geospatial analytics specialist Radiant Group, helped balance total revenue. Maxar reported $557.7 million in revenue for the first three months of the year, an adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of $187.4 million, and net earnings of $31 million.

Lance said Maxar is using DigitalGlobe sales channels to market radar products from MDA Corp.’s Radarsat-2 satellite. Maxar doesn’t have data rights to the RCM constellation because “the Canada Department of National Defense will be using all of that capacity,” he said. Maxar is discussing with the Canadian government a follow-on program that would yield surplus capacity, Lance said.

“We continue in discussions with the government of Canada on what they call the RCM Radar Continuity program,” Lance said. “This would be additional satellites to provide additional capacity, some of which could be available for commercial use by Maxar.”

Capital expenditures grew by $21.5 million year-over-year to $77.5 million as Maxar invests in WorldView Legion, its next-generation Earth observation constellation. Lance remained tight-lipped on the details of WorldView Legion. The constellation starts launching in 2021 and will be able to revisit specific areas of interest every 20 to 30 minutes, capturing images at 30-centimeter resolution. DigitalGlobe selected SpaceX to orbit the constellation in 2021 using two Falcon 9 rockets with previously flown first-stage boosters. The company has not stated how many satellites will form the constellation.