Satellite Telecom | Telesat Sees Growth as It Navigates Complex Arrangements with RSCC and Apstar

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PARIS — Satellite fleet operator Telesat on Feb. 24 reported a 6 percent increase in revenue and a 9 percent increase in gross profit in 2013 despite a slow end-year performance, benefiting from the first full year’s operations of the Nimiq 6 direct-broadcast satellite launched in 2012 and early revenue from Anik G1, in operation since mid-2013.

In a Feb. 24 conference call with investors and a filing with the U.S. Securities and Exchange Commission (SEC), Ottawa, Canada-based Telesat said it would order a Telstar 18 replacement satellite this year, pending negotiations with APT Satellite Holdings of Hong Kong and the government of Tonga about future rights to the Telstar 18 orbital slot and associated capacity.

Telesat also said it had reached agreement with Russian Satellite Communications Co. (RSCC) of Moscow about frequency rights at 14-15 degrees west in geostationary orbit, to which RSCC had priority. The agreement will force Telesat to move some existing customers on its Telstar 12 satellite, at 15 degrees west, to other frequencies.

Until now, Telesat has operated Telstar 12 without restraint because of delays in RSCC’s plans to place its own satellite at 14 degrees west, close enough to require an elaborate frequency-sharing arrangement between the two operators.

Telesat in 2013 ordered a new satellite for its slot at 15 degrees, the Telstar 12 Vantage from Airbus Defence and Space of Europe, which is scheduled for launch in late 2015 aboard a Mitsubishi Heavy Industries-built H-2A rocket.

RSCC’s Express-AM8 satellite, meanwhile, is back on track and scheduled for launch aboard a Russian Proton rocket in September, RSCC said in a Feb. 25 statement on the Telesat accord, which covers both Telstar 12 and its Telstar 12 Vantage successor as well as Express-AM8.

“RSCC will operate Express-AM8 in full,” the statement said. “The agreement contains strict terms ensuring the two networks’ compatibility. At the same time, the terms will not lead to significant restrictions in frequency usage because they were developed based on the satellites’ specifications and take into account both parties’ interests in terms of service-region geography.”

Under International Telecommunication Union (ITU) rules, RSCC had priority in Ku-band over Telesat because it registered the frequencies in that orbital neighborhood before the Canadian company.

In cases of potential frequency interference, the ITU typically asks the satellite owners in question to tailor their frequency plans to maximize use of the available spectrum, even if one of them has priority.

In its Feb. 24 SEC filing, Telesat said that under the agreement, it “will be forced to cease using certain frequencies on our Telesat 12 satellite as soon as RSCC’s satellite is launched and commences service, which will require us to relocate some of our customers onto alternate frequencies.”

Telesat said it expected to spend 182.3 million Canadian dollars ($170.4 million) in 2014 on Telstar 12 Vantage satellite construction and launch milestone payments. The company spent 71 million Canadian dollars in 2013 on Telstar 12 Vantage and on the final payments for the construction and launch of Anik G1.

Telesat said in its SEC filing that it has yet to complete negotiations with APT on a replacement for Telstar 18, and that these negotiations could be complicated in the event the U.S. government does not grant export approval for Telesat’s proposed new satellite. APT has had use of most of the capacity on Telstar 18, which APT calls Apstar 5, by virtue of having financed most of the satellite’s construction and launch. The lease arrangement was worked out between APT and Loral Space and Communications of New York before the satellite’s launch in 2004, and before Loral sold its fleet to Telesat in return for a majority economic stake in Telesat.

The 138 degrees east slot is registered to the Kingdom of Tonga, which granted access to APT of Hong Kong.

Telesat said it is relying on unidentified third parties to secure its future rights to the orbital slot, which are subject to agreement by the Tongan authorities and by APT.

Telesat said it has agreed with APT that “if we are unable to obtain the necessary approvals and licenses from the U.S. government under U.S. export laws,” it would transfer to APT title of the transponders APT currently uses, and also transfer title to APT of common satellite systems shared by APT transponders and Telesat transponders.

The Chinese government, though the China Aerospace Science and Technology Center, owns 55 percent of APT.