MDA Corp. says commercial satcom bidding is at record-high level
PARIS—MDA Corp. of Canada on May 4 said bidding activity for commercial telecommunications satellites is at record levels and that the company had received seven requests for information (RFI) on terabit-per-second-throughput satellites from prospective customers.
An RFI is not an RFP and still less a contract, and 2016 so far has been a mediocre year for commercial telecommunications satellite contracts.
But in a conference call with investors, MDA Chief Executive Daniel E. Friedmann, who is stepping down from his position as of May 16, said he had never before seen this level of market effervescence, both for geostationary-orbit satellites and constellations of satellites in lower orbits.
He referred to at least one medium-Earth-orbit satellite constellation for which an RFP has been issued. MDA is a major supplier to Thales Alenia Space of France and Italy, which recently ordered 96 antenna subsystems for the next eight satellites in the O3b Networks medium-orbit constellation, which now counts 12 satellites in orbit.
Richmond, B.C.-based MDA purchased Palo Alto, California-based satellite manufacturer SSL in 2012. Since then, MDA has worked to broaden SSL’s appeal beyond its traditional commercial geostationary-satellite focus to include U.S. government business and smaller, non-geostationary satellites.
The strategy has borne fruit. SSL is under contract to build 13 optical Earth observation satellites for Google’s Terra Bella geospatial-imagery provider, and Friedmann said all indications are that Google is in the satellite business to stay – and to grow.
SSL recently won a contract to build a small Ka-band telecommunications satellite for satellite fleet operator Telesat of Ottawa, Canada – one of two that Telesat has ordered to register a proposed low-orbit constellation.
Friedmann said SSL’s recent win of another small prototype for a proposed low-orbit constellation is with a “well-funded customer” whose identity MDA has not disclosed.
Finally, MDA has invested about $25 million in OneWeb LLC, which is building 900-plus satellites for a low-orbiting Internet-delivery constellation. MDA is one of numerous prospective OneWeb suppliers to prime contractor OneWeb Satellites — a joint venture of OneWeb and Airbus — that have been investing on their own without a firm contract.
“We’ve continued to work very hard on many aspects of the OneWeb project as it proceeds to procurement,” Friedmann said.
Satellite broadband hardware and services provider ViaSat Inc. made a splash in the satellite market earlier this year by announcing that it would build, with Boeing Space and Intelligence Systems of El Segundo, California, two terabit-per-second ViaSat-3 Ka-band satellites, one over the Americas and the Atlantic air routes, and the second over Europe and Africa.
ViaSat competitor Inmarsat of London immediately labeled ViaSat-3 “a mythical beast.” To hear MDA tell it, many more such beasts are slouching their way to market.
SSL and fleet operator Eutelsat of Paris recently announced that the Eutelsat 65 West satellite, now in orbit, carries an Extremely High Frequency (Q/V-band) test payload. The two companies “are analyzing the potential of Q/V band as an enabler of future terabit satellite broadband programs,” MDA said.
Friedmann announced in April that he was leaving MDA after 20 years as chief executive to allow a U.S. citizen, based at SSL, to run the company as it seeks more U.S. government work. Howard L. Lance, former chief executive of Harris Corp., will succeed Friedmann as of May 16.
Several industry analysts assumed that Friedmann’s departure must have been due to poor financial results and could not have been simply a matter of needing a U.S. citizen, in the United States, to manage the business.
But MDA reported revenue of 562.4 million Canadian dollars ($432 million) for the three months ending March 31, up 5 percent year on year. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was up 4 percent, to 97.2 million Canadian dollars.
The communications satellite business reported an EBITDA margin of 14.7 percent, compared to 13.9 percent for all of 2015.
In the conference call – which began with a tribute to Friedmann’s accomplishments at MDA by Chief Financial Officer Anil Wirasekawa – Friedmann sought to persuade investors of how important it was that MDA become more American.
MDA has estimated that $2 billion in space-hardware business would be contracted by the U.S. government in the near term, with many more billions on the way from various U.S. agencies.
Of the initial $2 billion, Friedmann said, 75 percent requires specific security clearances for SSL and its employees.
SSL has submitted the required applications to U.S. government agencies to receive security clearance, a process Friedmann said would be completed by this summer.
“We have applied, and we have to produce a certain number of plans, which are familiar to us because we’ve operated special security arrangements and proxy arrangements in the past,” Friedmann said. “We are getting sponsorship from the agencies that want us to work for them. Our target is to have a facility clearance b the third quarter. That’s when we need it to hopefully execute on some of the new-build projects.”
Friedmann restated that the company’s satellite in-orbit servicing project, which has evolved into an all-American effort with an SSL satellite bus and U.S.-based operations, would not proceed before NASA and the U.S. Defense Advanced Projects Agency, DARPA, had clarified their own plans.
Friedmann said a NASA RFP is expected soon for a system that would refuel satellites in low Earth orbit – which is not what MDA had focused on in its earlier work, which targeted geostationary-orbit satellites. DARPA is investigating a geostationary-orbit robotic servicing mission that would inspect, repair and, if needed, relocate satellites, but not refuel them.
MDA is already under a contract valued at “several 10s of millions of dollars” to NASA and DARPA relating to the automatic in-orbit assembly of satellites.
Commercial demand for in-orbit servicing, he said, is difficult to predict.
“People are modifying satellites pretty fast,” Friedmann said. “Fueling old satellites may or many not be the best idea today.”