Profile: Integrating Telecom, Imaging, Navigation Services

by

Eric Beranger, CEO, Astrium Services

Managers of the Astrium space division of European aerospace giant EADS have long predicted that the services business would be the division’s profit engine in the coming years.

What they did not say was that, in addition to its large contracts to provide satellite telecommunications services to the British Defence Ministry and to NATO, Astrium Services would expand quickly into Earth observation and satellite navigation.

The growth has been spectacular. From just 166 people and 65 million euros ($95 million in today’s dollars) in revenue




 in 2003, Astrium Services now counts 1,700 employees and expects 2007 revenue




to surpass 600 million euros.

For Astrium Services Chief Executive Eric Beranger, growth has its challenges, especially since the company must integrate different businesses in France, Britain and Germany that include selling radar satellite services to governments and commercial customers, providing secure communications to deployed military 




forces, and monitoring gas pipelines in Germany.

Beranger
 says customer demands and technology are driving toward an integration of telecommunications, Earth observation and navigation services.

Beranger
spoke with Space News staff writer Peter B. de Selding.




You now have your first two Skynet 5 satellites in orbit. Does that change your sales approach toward the U.S. Department of Defense and other prospective customers?

It does change things because our understanding of U.S. Defense Department procurement policies is that they do not like to purchase satellite capacity on speculation. What we have now, with two satellites in orbit, are two large satellites that meet NATO specifications for anti-jamming and nuclear hardening. No other company has assets like this.

You will be launching two BwSat spacecraft in 2008 and 2009 for the German Defense Ministry. Will these be added to the Skynet 5 assets for sales to third parties?

The BwSat spacecraft system will be operational in 2009. The satellites are totally dedicated for use by the German defense forces. But our customer here is obviously aware of what we can offer and in the event they need added capacity, we can help out. The two systems, Skynet 5 and BwSat, are interoperable.

Astrium

 Services and your partner, Thales Alenia Space, have jointly won the $1.66 billion, two-satellite Yahsat contract for the United Arab Emirates. What is the Astrium Services role?

We are in charge of the system design. Our Military Communications Systems division is handling the ground segment. Yahsat resembles two big Skynet 5 satellites, but with a large portion of Ka-band. There are commercial perspectives for this system, but the project was created to deliver services to the military forces of the Emirates.

Your Skynet5 customers include British and several other national European military forces, as well as NATO under a long-term contract. Might these same customers ultimately be interested in Ka-band?

Our current customers are studying this now, and so of course Ka-band interests us because we are trying to understand the evolution of our customers’ services requirements. We had proposed a Ka-band payload for the European Space Agency’s Alphasat technology-demonstration program, in partnership with Telespazio and Eutelsat, before Alphasat was awarded to Inmarsat for a different mission.

Abertis 

of Spain wants to purchase a large stake in satellite-fleet operator Hispasat. You have declined to sell your shares. Is this because of the Hispasat’s part ownership of the Spanish Hisdesat company, which markets military telecommunications capacity through the Spainsat and Xtar spacecraft?

There is no plan to sell, and this is not connected with Hisdesat. It is simply that we have no specific plan either way at the moment.

Thales

 Alenia Space is prime contractor for the French and Italian military satellite communications systems. Do you foresee France and Italy moving toward the same kind of services contract as Britain – and to some extent Germany – and a partnership between you and Thales Alenia Space?

We have no relationship now with Thales Alenia Space on services. We tried to persuade the French Defense Ministry that we could save them money on the Syracuse system by adopting a Skynet 5 model, but they have pursued other avenues for Syracuse.



Astrium 
Services is also now in the Earth observation business via Infoterra of Germany and Britain, and through your 40 percent share of Spot Image.

What

 will you do with these assets?

We do not consolidate Spot Image in our accounts because we are only a 40 percent owner. But the idea is to bring all of Astrium’s services business under one roof. There are large maneuvers occurring now in the Earth observation services world. There are lots of actors and consolidation of the sector is the order of the day.

What we hope to do is to be able to offer our customers a one-stop-shop of telecommunications, Earth observation and navigation services. We think the combination will have an appeal.




You recently purchased the Ascos satellite positioning service from E.ON Ruhrgas of Germany. How does this purchase fit in to your service offering?

We and Allsat of Germany will be operating the E.ON for location and positioning of gas pipelines down to centimeter-level precision using differential GPS [the U.S. GPS satellite network together with ground-based reference stations to improve accuracy]. We will now be in charge, with Allsat, of operating that existing network and expanding it elsewhere. We also think differential GPS has a great potential for defense-related services. There are many applications that we think can be developed with this.

You were in the consortium bidding to manage Europe’s Galileo satellite navigation system. Are you still interested now that the consortium has been disbanded?

Galileo’s business model has been changed and for the moment there is no decision on what entity will operate the system. We’ll have to wait and see.

How do you avoid culture clash or other misunderstandings in a company that had less than 200 employees in 2003 and now counts 1,700 in France, Britain and Germany?

That has been one of our highest priorities in recent months. It’s obviously a major change for us, and a challenge to keep some of the entrepreneurial culture that we had. But a services business model is not the same as a hardware model, and we think we’ll be able to get everyone working in the same direction.




EADS recently announced it would be selling rights to your future earnings streams to a financial institution for slightly more than 500 million euros






 in cash. What effect will that have on your ability to fund research and development






or external growth?

The only thing I can say is that we have achieved our milestones this year, and as a result we are on track to meet our plans.