MDA Corp. says more HTS satellites coming; pursues repositioning as U.S. entity

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PARIS – Commercial satellite manufacturer MDA Corp. of Canada on July 28 said “a material amount” of satellite bid requests it receives is for high-throughput satellites (HTS) but that those interest are focused on a broad range of capacities, not just 1-terabit-per-second spacecraft.

The company said overall commercial telecommunications satellite demand – for both HTS and conventional widebeam satellites – remains strong and that the year is likely to end with around 20 geostationary-orbit spacecraft ordered worldwide.

Nine such spacecraft have been ordered so far in 2016, of which MDA and its Palo Alto, California-based Space Systems Loral (SSL) division have won four.

The latest order is from U.S. satellite radio broadcaster SiriusXM Radio, which contracted for two satellites, SXM-7 and SXM-8, to be launched in 2019 and 2020. Each will provide mobile S-band coverage over the United States and will be designed to provide more than 20 kilowatts of power to the payloads.

U.S., Canadian business to be under U.S.-registered holding company

MDA is in the midst of a major transformation toward a more U.S.-focused company, starting with its chief executive, Howard L. Lance, formerly of Harris Corp. and a U.S. citizen, who assumed his post in May. The goal: position MDA and SSL for U.S. government work that currently is beyond its reach because of its Canadian status.

In a conference call with investors, Lance said MDA had created a U.S. holding company and filed with U.S. government agencies documentation to “[mitigate] MDA’s foreign ownership, control or influence on the new U.S. holding company’s operations,” a process that should be completed by this autumn.

Once completed, he said, “we will be able to secure the necessary facility and security clearances… to bid and execute a much wider range of U.S. government and commercial contracts,” Lance said. “We moved the Canadian and U.S. operations under the holding company.”

How far MDA can go in Americanizing itself without losing its current advantage with Export Development Canada, Canada’s export-credit agency, is unclear. For now, SSL is eligible for EDC financial backing even when the bulk of the satellite development and manufacturing is done at SSL in California.

MDA: Entire industry suffers from U.S. Export-Import Bank’s absence

With the U.S. Export-Import Bank closed for major new business for the past year while awaiting U.S. congressional approval of a new director, EDC’s importance has grown. SSL’s competitors – Boeing, Lockheed Martin, Orbital ATK – do not have access to the Canadian agency.

The extent to which this has affected their contracting success is a subject of debate.

MDA Chief Financial Officer Anil Wirasekara insisted during the conference call that MDA was also suffering from the absence of the Ex-Im Bank because many satellite deals are financed with a combination of U.S., French and Canadian credit agency support. The French and Canadian agencies have struggled to fill the gap, especially since Ex-Im has been, with France’s Coface, the most-active export-credit agency in the satellite market in recent years.

“Ex-Im is closed for new business,” Wirasekara said. “That has made it challenging for EDC and Coface to take on the additional burden. Ex-Im’s not being around has delayed maybe one or two programs.”

Wirasekara said a $150 million satellite, launch costs and insurance plus nine months of operations mean a satellite owner is often looking for up to $500 million in financing in total. “Two or three [credit agencies] syndicate together,” he said. “When one goes out, it becomes difficult. We would love to have Ex-Im back in the game.”

LEO constellation work to help geostationary business

MDA recently won a contract from Internet satellite constellation start-up OneWeb Satellites for 3,600 communications antenna components for the 900 OneWeb low-orbiting satellites. The work will be done at MDA’s Montreal facility. MDA is a OneWeb investor and the contract had been expected.

Lance said the OneWeb contract, plus work MDA is doing for Thales Alenia Space of France and Italy for Luxembourg-based SES’s O3b medium-Earth-orbit constellation and Iridium Communications’ second-generation mobile communications satellites, in low Earth orbit, should provide flow-through benefits for SSL’s core business of large, geostationary-orbit satellites.

MDA-SSL is prime contractor for 21 small low-Earth-orbit satellites — one prototype for Telesat of Canada, one for an unnamed customer and the Google-owned Terra Bella Earth observation constellation.

Lance said he had been encouraged by his first meetings with Canadian government officials. His predecessor, Daniel E. Friedmann, had regularly expressed frustration with the fact that MDA was growing faster than the Canadian government’s ability to support it with government contracts.

The Canadian government recently announced up to 31.4 million Canadian dollars ($24 million) in matching-fund grants to MDA for its work on a new-generation satellite digital payload processor. MDA has been spending heavily on the technology using its own resources.

For the six months ending June 30, MDA reported total revenue of 1.065 billion Canadian dollars, compared to 1.058 for the same period a year ago. Communications systems accounted for 70 percent of the work, with surveillance and intelligence systems – led by three-satellite Canada’s Radarsat Constellation Mission contract – accounting for 30 percent.

Operating earnings for the six-month period were 113.1 million Canadian dollars, flat from a year ago.