Com Dev Looks to Commercial Ka-band for Future Growth

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PARIS — Canadian satellite electronics manufacturer Com Dev International reported Sept. 6 a 7 percent increase in revenue and an 11 percent increase in order backlog for the three months ending July 31 and said broadband satellites using Ka-band frequencies are “the wave of the future.”

In a conference call with investors, Com Dev said building switches and other gear for Ka-band spacecraft is no more profitable than doing the same work for satellites using the more-conventional C- or Ku-band frequencies.

Com Dev Chief Executive Michael Pley said this is especially true given that Com Dev is aggressively marketing its Ka-band electronics to secure a market share similar to what it has in Ku-band.

“We see Ka-band driving growth in our core products market for years to come,” Pley said.

Most telecommunications satellites for which work is open to competition include at least some Com Dev equipment.

The Cambridge, Ontario-based company is gradually shifting its business mix away from the Canadian government, whose space programs have not kept pace with the growth of the satellite telecommunications market.

More pointedly for Com Dev, Canada’s Radarsat Constellation Mission (RCM), a follow-on to Canada’s current Radarsat Earth observation satellite, remains on uncertain financial footing.

Com Dev and Richmond, British Columbia-based MDA Corp., which is RCM’s prime contractor and Com Dev’s immediate customer for the program, have warned for months that if financing stops, they will not keep RCM teams on payroll.

Pley said that in the three months ending July 31, Com Dev eliminated 17 jobs that had been devoted to Canadian government work. Nine of these employees were transferred to the healthy satellite telecommunications business; eight were laid off. Com Dev booked 500,000 Canadian dollars ($500,000) in termination charges related to these dismissals.

The layoffs were mainly a result of Com Dev’s completion, in July, of work on the Fine Guidance Sensor, one of four instruments to fly aboard NASA’s James Webb Space Telescope in 2018. Com Dev was under contract to the Canadian Space Agency.

Com Dev’s work on the project dates from the company’s 2005 acquisition, for 5 million Canadian dollars, of the space science and optical payload division of the former EMS of Ottawa, Ontario.

Pley said that since this transaction, the James Webb contract has generated more than 120 million Canadian dollars, while other EMS-derived contracts have generated “tens of millions more on science and military space programs.”

Pley said that while “there is no solution now” to the RCM contract-expiration problem, he still believes the Canadian Space Agency will pursue RCM before Com Dev’s work ends in the next couple of months.

Com Dev classes its satellite work among commercial, civil and military programs. Traditionally, the commercial side has accounted for more than half of the company’s revenue.

But Com Dev Chief Financial Officer Gary Calhoun said the company counts as civil-government revenue any work on government-owned satellites or satellites owned by companies that are government controlled.

With the rise of national and regional satellite operators with their own telecommunications satellites, this has meant more Com Dev revenue is coming from the civil-government side even if these satellites are indistinguishable from purely commercial spacecraft, and their owners in many respects act as commercial entities in the fixed satellite services market.

As a result of this, Calhoun said, Com Dev’s work for the three months ending July 31 was just 45 percent commercial. Civil government was 35 percent and military, 20 percent.

Com Dev’s 73 percent-owned exactEarth Ltd. affiliate, which since 2010 has been commercializing a satellite-based Automatic Identification System (AIS) for maritime surveillance, reported 2.7 million Canadian dollars in revenue for the three months ending July 31 and 10.4 million dollars in revenue for the nine months ending then.

For the same nine-month period a year ago, exactEarth reported 7.3 million Canadian dollars in revenue.

Peter Mabson, president of exactEarth, said the company’s ev-1 satellite launched in July — a satellite Com Dev believes is unsurpassed in its ability to distinguish and collate AIS signals from ships — is in good shape and should be ready for commercial operations starting in late October.

Several other companies have been testing satellite-delivered AIS services with their own spacecraft, and Fort Lee, N.J.-based Orbcomm is already positioned as a direct exactEarth competitor. The 19-nation European Space Agency is weighing whether to fund its own AIS effort, with a decision expected in November.

Com Dev as a whole reported 54.5 million Canadian dollars in revenue for the three months ending July 31, up 7 percent from the same period a year ago. Order backlog stood at 140 million Canadian dollars, up 11 percent from last year.