Arabsat To Order Four Satellites, Including Two for Hellas Sat Subsidiary

by

Updated March 7 at 10:38 a.m. EDT

PARIS — Arabsat of Saudi Arabia and Telesat of Canada, in a broadening of their strategic partnership, on March 6 said they would share capacity on one of two new satellites for Arabsat-owned Hellas Sat of Greece to be ordered by Arabsat as part of a four-satellite package.

A formal request for bids for the four-satellite package will be issued the week of March 10, Arabsat said in a March 6 response to SpaceNews inquiries. Bidders will have around two months to submit proposals, after which Arabsat “may announce the winners by mid-year.”

Riyadh-based Arabsat had already been preparing to solicit bids on a sixth-generation Arabsat satellite system, with a tentative decision to order two or three spacecraft. For the four-satellite order now planned, the company wants bids on two Hellas Sat satellites and two Arabsat spacecraft.

Combining the orders for the Hellas-sat 3 and Hellas-sat 4 satellites with Arabsat 6A and Arabsat 6E should allow Arabsat to benefit from a volume discount from manufacturers, assuming the satellites will be using the same platform design.

Arabsat is nonetheless holding open the possibility that more than one manufacturer will be selected. “It’s not necessary that one bidder take all,” the company said.

Hellas-sat 4 will operate at 39 degrees east, with a launch planned for 2017, and carry a Ku- and Ka-band payload. Ottawa-based Telesat has agreed to use a portion of the satellite’s Ku-band payload for the satellite’s full 15-year design life for coverage over Europe and the Mediterranean region.

“Telesat has basically a small Ku-band payload on the satellite for telecommunications services in the European coverage beam,” Arabsat said. “Telesat took this payload as a lifetime lease. It’s a pure commercial supplier-customer relationship — more of a hosted payload than a joint satellite or anything of this nature. Arabsat will have major Ku- and Ka-band beams in Africa, the Middle East and Europe for both telecommunications and DTH services.”

Telesat and Arabsat have collaborated previously, notably during periods when Arabsat/Hellas Sat has needed short-term capacity and has leased aging Telesat spacecraft.

Arabsat’s decision to commit to its own sixth-generation satellites and the new Hellas Sat capacity “reflects the company’s views on the exciting growth opportunities ahead of us and our commitment to capitalize on these opportunities,” Arabsat Chief Executive Khalid Balkhyour said in a statement. “This commercial agreement with Telesat reflects the lasting cooperation between two leading satellite operators and will further establish Hellas Sat as a leading service provider in Europe.”

Arabsat purchased a majority share of Hellas Sat in February 2013 and subsequently announced it would be investing $700 million to increase the Hellas Sat footprint from 39 degrees east. Hellas Sat is Arabsat’s first major acquisition.

Telesat Chief Executive Daniel S. Goldberg said the agreement “will provide Telesat with prime Ku-band capacity over Europe and the Mediterranean that complements well our existing capacity.”

Telesat and Arabsat are, respectively, the world’s fourth- and eighth-largest satellite fleet operators when measured by 2012 revenue. Each has been seeking a way to break out of its home region. For Arabsat, the purchase of Hellas Sat was one response, as was its interest in the possible purchase of Measat of Malaysia.

Acting on growth opportunities has been more complicated for Telesat, in part because its owners loaded considerable debt onto the satellite operator with a dividend recapitalization, and in part because at least one of the owners — New York-based Loral Space and Communications — has been focused on trying to sell Telesat rather than grow the business.

Loral and PSP Investments of Canada have tried before the sell Telesat but they demanded a price that no prospective buyer was willing to pay. Loral has said it will continue to seek ways to monetize its Telesat investment, including selling itself.