Com Dev Sees No Sign of Slow Down in Satellite Demand

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PARIS — Canadian satellite-component builder Com Dev on Sept. 3 reported continued high demand from commercial satellite operators worldwide, with more in-orbit capacity ordered in the three months ending July 31 than in the same period a year ago.

The company, whose core business is providing multiplexers, switches and other gear to satellite prime contractors, said the eight commercial satellites ordered between May and July will carry a total of 426 transponders, while the three civil government satellites ordered in the same period will carry 178 transponders.

The 604 total transponders compare with 381 transponders — 325 for nine commercial satellites, 48 on two civil government spacecraft and eight on military satellites — contracted in the same period last year.

The 58 percent increase in transponders despite a slightly lower number of total satellites indicates that commercial and civil-government satellite owners are being more aggressive in ordering larger satellites, which are more expensive to build and to launch.

Com Dev Chief Operating Officer Mike Pley said the Cambridge, Ontario-based company continues to survey the global satellite market for any signs of a slowdown but has seen no slippage in demand. “To date, almost all signs are positive,” Pley said in a conference call with investors. Com Dev in recent years has won work on about 80 percent of the commercial satellites ordered each year. One of its main competitors is Tesat Spacecom of Backnang, Germany, which operates as an independent company but is owned by satellite prime contractor Astrium of Europe.

Com Dev also spelled out its investment strategy in a space-based Automatic Identification System (AIS), which will provide global maritime and coastal authorities with information about ships at sea.

Com Dev earlier this year created a subsidiary, called exactEarth Ltd., to oversee development of the AIS service, which for Com Dev will start with the launch of AIS terminals on three spacecraft between now and mid-2011.

Com Dev officials view AIS as an engine to drive the company’s future expansion in two ways. The first is to become the global front-runner in AIS payloads that could be launched piggyback on just about any polar-orbiting low Earth satellite with space available. Com Dev’s second goal for AIS is to use demand for the service to establish Com Dev’s credentials as a prime contractor for small satellites.

Com Dev expects to have spent 30 million Canadian dollars ($27.5 million) on AIS by the time the company’s fiscal year ends Oct. 31. That investment, coupled with Canadian government spending on AIS, will place three AIS payloads into space as part of the project’s first phase.

The first of the three in-orbit AIS assets will be a payload to be launched in early 2010 aboard an Indian Space Research Organisation satellite. The second is an AIS-dedicated satellite Com Dev is building on its own, to be launched in 2010. The third is a satellite being built with Canadian government investment.

Com Dev Chief Executive John Keating said the complete AIS service as imagined by Com Dev will feature six satellites or payloads, but that Com Dev will not be spending its own money to build the other three.

Seeking to calm investor concerns about the size of the AIS investment, Keating said: “We have no ambition, nor any desire, to fully fund such a [six-satellite] constellation ourselves. We may indeed create such a solution in the long run. But if we do, it will be in concert with the Canadian government or with a strategic partner.”

Com Dev Vice President Peter Mabson, who is chief executive of exactEarth, said the first three AIS spacecraft alone would satisfy the International Maritime Organization’s requirement for an AIS service capable of collecting fresh information about global shipping every six hours. Given the nature of the orbit, the first three satellites will pass over ships well to the north or south of the equator — including Canadian and European waters — every three hours.

A six-satellite AIS service would be able to provide global ship information every 90 minutes, Mabson said.

For this three-satellite system, Com Dev would need to generate 15 million Canadian dollars in annual revenue to be profitable. Company officials have said the global market for AIS is likely to reach 100 million Canadian dollars per year. Keating said Com Dev had received letters of intent from four unnamed government agencies interested in subscribing to the future AIS service. He declined to identify them.

Com Dev’s biggest near-term competitor in AIS is Orbcomm of Ft. Lee, N.J., which has started providing a satellite-based AIS service with the U.S. Coast Guard. Several European governments are also looking at making their own investment in AIS.

Com Dev has estimated that a full six-satellite constellation could be built and launched for no more than 100 million Canadian dollars, including the 30 million Canadian dollars being spent on the first three. The full-constellation cost, Mabson said, could end up being substantially less if the AIS service found host satellites to carry the payloads instead of launching full satellites.

Canada’s Department of National Defence is expected to decide in 2010 whether to place AIS payloads on the Radarsat Constellation remote-sensing satellites now being designed. On a separate track, the Canadian Space Agency is weighing a possible constellation of AIS-equipped microsatellites.

For the nine months ending July 31, Com Dev reported operating income of 15.5 million Canadian dollars on revenue of 182.1 million Canadian dollars. The operating-income margin of 8.5 percent compared to a 5.3 percent margin in 2008, and revenue was up 21 percent.