PARIS — Telesat Canada is pitching itself to prospective stock-market investors as a regional satellite-fleet operator that has demonstrated its ability to grow the business profitably, especially in the United States.

But Ottawa-based Telesat, the world’s fourth-largest commercial fixed satellite services company, concedes in its registration with U.S. and Canadian stock-market authorities that Canadian-ownership regulations could limit the upside potential that would exist if Telesat were an eligible takeover target.

Under Canadian law, Telesat must remain owned and controlled by Canadian interests. The law further stipulates that at least 80 percent of Telesat’s voting shares, and 80 percent of its board of directors, must be Canadian.

Financial analysts and potential strategic investors have said that were it not for Canadian regulations, Telesat likely would command a premium price among the private-equity or strategic investors that have transformed the fixed satellite services industry in recent years with mergers and acquisitions.

Telesat’s Sept. 18 registration statement acknowledges this, saying that Canadian law may “limit our ability to participate in industry consolidation, which may adversely affect our business.”

But Telesat says that while it lacks the global reach, in-orbit fleet backup and other benefits of its big competitors like Intelsat of Washington, SES Global of Luxembourg and Eutelsat of Paris, it also can react more quickly to new business opportunities. “The agility afforded us by our small size relative to major satellite operators [gives] us a competitive edge by being able to be first to market with certain of our new services,” the company stated in its filing.

The preliminary registration statement for an initial stock offering (IPO) this year leaves out several key details. The company says the stock offering for a minority stake will be valued at about 400 million Canadian dollars ($358 million), but cautions that this figure might change.

More importantly, the amount of debt that Telesat will have as the IPO proceeds is unknown. Telesat’s owner, BCE Inc. of Ottawa, has said it will recapitalize Telesat but has not disclosed how much debt it will load on the company.

Telesat has grown its revenues by about 10 percent per year, on average, for the last five years and has increased its presence in the U.S. market despite the fact that it operates in a Canadian regulatory environment that has prohibited a full opening of the U.S. market.

In 2005, Canada was the source of 63 percent of Telesat’s revenues. The United States accounted for 29 percent, nearly double the amount in 2004 as Telesat continued to broaden its portfolio to include long-term services contracts. One of these is a five-year operations and maintenance contract for an interactive distance learning network in Canada, the United States and Mexico.

Telesat also operates a satellite consultancy that recently won contracts to advise the governments of Nigeria and Vietnam on telecommunications satellite procurements.

In a presentation prepared for a Sept. 6 financial conference, Telesat’s outgoing chief executive, Larry J. Boisvert, said 35-40 percent of Telesat’s new business is coming from outside Canada.

Telesat was the first operator in North America to make a big commitment to Ka-band, a relatively unused portion of the radio spectrum that has long been seen as a logical bandwidth for broadband Internet service.

Telesat’s Anik F2 satellite provides Ka-band broadband services to Canadian businesses and consumers. It also has permitted WildBlue Communications of Denver to inaugurate the WildBlue consumer-broadband service aboard the Anik F2.

Telesat management had planned to order a dedicated Ka-band satellite to meet the demand for consumer broadband, but the Sept. 18 registration says the company sees no need for any new satellites beyond the two spacecraft already on order.

In its registration statement, Telesat says the Anik F2 has suffered “intermittent anomalies with certain of its amplifiers in its Ka-band and Ku-band payloads” that could reduce the satellite’s capacity if they persist or worsen.

Telesat Chief Financial Officer Ted Ignacy said in a Sept. 19 interview that the company is not overly concerned about the Anik F2 status, which he said has not affected any of the Ka-band users in Canada or, through WildBlue, in the United States.

Telesat is facing at least two deadlines as it plots its expansion strategy. One of the two satellites it has leased from DirecTV of El Segundo, Calif., occupies a Canadian-registered slot at 72.5 degrees west longitude. Telesat must launch a new satellite into that position by the end of 2008 or risk having its rights there revoked by Canadian regulators.

Telesat also plans to bid on one or more orbital positions being prepared for licensing by Canadian authorities, and the company must divulge which slots it will seek in November. Telesat’s new domestic competitor, Ciel Satellite, also is bidding for these slots.

Canada at a Glance


PRIVATE colorchange:<c”Black”>2005 revenue: $407.3 million

2005 EBITDA*: 56 percent of revenue.

Backlog at June 30: $3.6 billion (59 percent from Canadian DTH broadcasters, Bell ExpressVu and Star Choice)

Satellite fill rate onJune 30: 84 percent.

Satellites in orbit: Five fully owned, plus two aging spacecraft leased from DirecTV and operated from Canadian orbital positions.

Satellites on order: Two Ku-/Ka-band satellites from EADS Astrium, one fully built, to be launched in 2007-2008.

*earnings before interest, taxes, depreciation and amortization

All figures are in U.S. dollars.