Downturn in Satellite Orders Creates Vacuum for Test Specialist Intespace

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PARIS — Satellite test facility operator Intespace has more than doubled its revenue in the past four years as it has diversified its customer base to include aircraft builders Airbus and Eurocopter and taken advantage of European satellite contractors’ success on the global commercial market.

Toulouse, France-based Intespace, which is majority-owned by satellite prime contractor Astrium Satellites, is now focusing on managing the downturn in the commercial satellite market and its inevitable effect on Intespace revenue.

“We know we are going to suffer a bit starting this year because we are obviously in a down part of the cycle” in the commercial satellite industry, Intespace Chief Executive Frank Airoldi said in a May 23 interview. “But the fact that we have increased market share and diversified our business means we will not suffer that much.”

About 60 percent of Intespace’s revenue is now from space-related testing of full satellites and satellite antennas and other space hardware. The remaining 40 percent is from civil-aviation providers testing fixed- and rotary-wing aircraft.

Intespace builds and operates satellite test facilities including two large therm-vacuum chambers in Toulouse. The larger of the two recently tested Europe’s largest-ever telecommunications satellite, Alphasat, which spent more than 70 days in thermal-vacuum testing — more than double a satellite’s usual test duration.

Because Intespace had invested in a second thermal-vacuum test chamber that is big enough to handle most other telecommunications satellites, the company’s customers were not forced to wait out the Alphasat testing, Airoldi said.

Intespace reported revenue of 53.3 million euros ($69 million) in 2012, a year that may be a high-water market as the commercial satellite sector goes through a downturn. But with the company’s diversification, Airoldi said revenue should stabilize at around 44 million euros annually until the commercial satellite business picks up.

The commercial aviation sector is in the middle of a growth spurt and stands in contrast to the telecommunications satellite market, which has been stagnant at best in the past couple of years.

Astrium Satellites, whose principal satellite manufacturing plant is next door to Intespace; and Thales Alenia Space of Cannes, France, which is a minority Intespace shareholder, have both been successful on the commercial market for telecommunications satellite orders in recent years.

But to varying degrees, both are now struggling to maintain plant throughput for their geostationary telecommunications satellite product lines. Intespace has secured work not only from these two prime contractors, but from Germany-based OHB’s Italian division, CGS, and from all the prime contractors’ equipment suppliers.

Thales Alenia Space has its own satellite test facility in Cannes but uses Intespace to eliminate bottlenecks in its satellite delivery schedule.

Intespace in the past three years has built a smaller satellite-class clean room near Paris, and it is a joint-venture partner with competitor IABG of Germany in European Test Services (ETS). Located at the European Space Agency’s Estec technology center in Noordwijk, Netherlands, the ETS facility is used for hardware that is too large to be accommodated by Intespace or IABG.

Airoldi said ETS reported revenue of about 8.7 million euros in 2012. ETS has grown its revenue in recent years, but much more slowly than has Intespace.

Intespace, IABG and ETS regularly compete among themselves for work from commercial and government customers, with the two ETS owners agreeing to arm’s-length relations with ETS so that the latter preserves customer confidentiality.

ETS won the competition to test 14 Galileo positioning, navigation and timing satellites being built by OHB.

Airoldi said the three competitors — with IABG focusing on automotive testing in addition to satellite work — appear to have been able to survive without pressure to consolidate. Whether that will remain the case will depend in part on how severe the commercial downturn turns out to be, and how successful the European prime contractors are.

The Spanish government has introduced a new element into the satellite testing environment by investing in test facilities operated by INTA, the National Institute of Space Technology.

Spain’s space investment has increased sharply in the past decade but is suffering from the nation’s economic crisis. Whether this will make INTA a more forceful competitor is unclear.

For now, it is Intespace that has taken responsibility for testing Spain’s Ingenio optical surveillance satellite, and IABG that will test Spain’s Paz radar reconnaissance satellite.

Airoldi said Intespace remains focused on India and Brazil as promising markets. The company is part of Astrium’s long-term contract to build a satellite test center in Kazakhstan, and it has built a facility in South Korea for that nation’s expanding space effort.