Brazilian Competition Proving Irresistible to Satellite Builders

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PARIS — Eight satellite builders have grouped themselves into seven separate bids for Brazil’s dual-use X- and Ka-band telecommunications satellite, a $362 million program that Brazilian officials say should result in the creation of a domestic Brazilian satellite builder that ultimately will compete globally with the eight bidders.

But despite the concern that whoever wins the Brazilian competition will be feeding the mouth that one day will bite it, the temptation to be an early partner in what is billed as a major national space program during its takeoff stage is too great.

The seven bidding teams are expected to be reduced to three finalists late this spring, with a winner selected this summer.

Boeing and Space Systems/Loral of the United States, Astrium Satellites and Thales Alenia Space of Europe and Mitsubishi Electric (Melco) of Japan all submitted separate bids for what Brazil calls its Geostationary Defense and Strategic Communications Satellite, or SGDC.

The two other bids are both led by MDA Corp. of Canada. One is with ISS Reshetnev of Russia and the other with Israel Aerospace Industries.

Perhaps the most notable aspect of the bid grouping is the dexterity of Richmond, British Columbia-based MDA, which is teaming with Russian and Israeli partners instead of Palo Alto, Calif.-based Space Systems/Loral, which MDA purchased in 2012.

MDA declined to discuss its bid strategy.

The SGDC satellite is expected to weigh no more than 6,000 kilograms at launch and to operate at 75 degrees west in geostationary orbit. It will be operated by Brazil’s Telebras national telecommunications company, with the system managed by Visiona Tecnologica Espacial SA, a joint venture created to manage the project.

Brazilian aircraft manufacturer Embraer’s Embraer Defense owns 51 percent of the Visiona joint venture, with Telebras holding the remaining 49 percent. Brazilian authorities have assigned Embraer the task of becoming a major satellite prime contractor capable of handling future satellite projects in part as a result of a large technology-transfer package the Brazilian government has inserted into the SGDC bid request.

A second SGDC satellite is part of Brazil’s national space program, which is coordinated by the Brazilian Space Agency, AEB.

Several of the bidders are using the SGDC program to give Brazilian authorities a glimpse of what future technology-transfer agreements might look like for optical and radar Earth observation, and satellite-based weather forecasting.

If the contest for the telecommunications satellite is placed into a wider context of generalized cooperation with Brazil, the two European bidders may have an edge as they have the most experience in selling Earth observation satellites to nations demanding sizable technology transfers. But Japan’s Melco has also demonstrated its export prowess in both telecommunications and Earth observation satellites.

U.S. satellite industry officials have said the U.S. government has become more comfortable with the export of U.S. imaging sensors and satellites, and that government regulations are no longer a showstopper for a U.S. satellite builder.

The Latin America Aero and Defense aerospace show, held April 9-12 in Rio de Janeiro, was an occasion for several bidders to show their presence as Brazilian authorities sift through the SGDC bids.

AEB has said the SGDC satellite is budgeted at 716 million Brazilian reais ($362 million) including its launch, which will be the subject of a separate competition.

The Brazilian Ministry of Defense already leases X-band capacity on the commercial Star One C1 and C2 satellites operated by Brazil’s private-sector satellite operator, Star One, for about 23 million reais annually, according to the ministry. The five X-band transponders to be placed on the first SGDC satellite will cover all of South America and the surrounding maritime routes.

Brazil’s Ministry of Communications leases seven Ku-band transponders on Star One satellites for about 43 million reais per year. The ministry will use the Ka-band spot-beam capacity on the SGDC satellite to offer broadband to Brazilian villages that do not have broadband access.

The mission clearly overlaps current and planned commercial satellites over Brazil, although Star One has said it hopes SGDC might stimulate the overall market in Brazil and not undermine the company’s business. The effect of the SGDC satellite’s Ka-band payload on the business plans in Brazil of other satellite operators — SES of Luxembourg, Hispasat of Spain, Eutelsat of France, Telesat of Canada and EchoStar/Hughes of the United States among them — is not clear.

It will be several years before Embraer Defense is able to compete with U.S., European, Russian and Asian competition as a satellite prime contractor, but the government has clearly set this as the target.

“Forty geostationary telecommunications satellites, all foreign, are operating in the country, using satellites manufactured abroad,” AEB said in the company’s space strategy document covering the 10 years to 2021. “We need to increase our country’s participation in the manufacturing.”