Top 5 Companies To Watch: Loral Space and Communications

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Loral Space and Communications

Headquarters: New York

Employees: 2,550

Revenue: $993.4 million

Loral Space and Communications is unusual in the space industry for a few reasons: It is both a major satellite manufacturer and a traditional fixed satellite services operator; its manufacturing business has been highly successful in recent years despite having no government customers to speak of; and while it is the majority shareholder in satellite operator Telesat of Ottawa, Canadian interests control that company by virtue of Canadian telecommunications policy.

But all that is about to change.

Last year, the Canadian government loosened its foreign ownership restrictions on domestic telecommunications companies, making it possible for a non-Canadian company to take control of Telesat, which primarily serves North American and European markets with a fleet of 12 satellites. The satellite operator is expected to be sold off in the coming year, but to whom is anybody’s guess.

Amid talk about possible consolidation among satellite operators, Eutelsat, flush with cash and with no North American fleet, would seem the most logical candidate. But Eutelsat Chief Executive Michel de Rosen has made clear that Eutelsat is interested in growing organically rather than via acquisition and specifically said the company declined to make a bid for the Canadian operator. Likewise, satellite operator SES said the asking price for Telesat is too high and that it would not be making a bid.

Intelsat is reportedly still taking a look, but the betting at this point is on a private equity investor taking control of Telesat.

Meanwhile, Loral is still interested in a public sale of 20 percent of Space/System Loral’s stock in what some see as a prelude to a full sale of the satellite manufacturer. Space Systems/Loral has been one of the most successful commercial satellite makers in recent years, but is likely to face stiffer competition as companies like Boeing and Lockheed Martin focus on the telecom market amid a decline in government space spending. Meanwhile, industry officials are expecting a cyclical slowdown in commercial satellite manufacturing to kick in over the next year or two.

The question of who takes possession of which components of Loral, and what that will mean for the rest of the industry, will have everyone in the commercial side of the industry watching closely in the months ahead.