Satellite operator Telesat says removing ownership restrictions to help it grow
By Luann Lasalle Canadian Press http://www.google.com/hostednews/canadianpress/article/ALeqM5g35DG5ZXYVKZQdwIkxgrdRvEI7dw MONTREAL (CP) — The removal of foreign ownership restrictions will allow Canadian satellite operator Telesat to grow through acquisitions and better compete against its larger rivals, says its CEO. CEO and president Dan Goldberg said Friday his three main global competitors are as much as five times bigger. "The bigger you are in this business the more effective you are going to be," Goldberg said in an interview. "Scale matters." Ottawa announced in the Throne speech and the budget that it intends to remove foreign ownership restrictions in the satellite and telecommunications industries. Telesat's major competitors are Luxembourg-based SES, Paris-based Eutelsat and U.S. company Intelsat. Goldberg noted Ottawa-based Telesat competes with all three globally and in Canada where the country's satellite market is open to foreign competitors, but still has ownership restrictions. Under the current rules, Telesat is unable to acquire other smaller satellite operators without breaking the foreign ownership restrictions, he said. "If we did that we would dilute our Canadian shareholder and be offside the Canadian foreign ownership restrictions." U.S.-based Loral Space and Communications Inc. has a 64 per cent stake in Telesat but minority voting control on Telesat's board of directors. Goldberg said there are no plans for Loral to increase its stake. The Public Sector Pension Investment Board owns the rest. Telesat was sold by BCE Inc. in 2006 for $3.42 billion. Goldberg said size also matters because the more satellites a company has, the easier it can deal with operational problems and the easier it is to raise money and borrow at a lower cost. Telesat has 12 satellites and is building two more while Goldberg says one of its major competitors has 55. Telesat satellites are used by BellTV and Shaw Direct TV and they're are also used to provide communications services to remote communities in Canada and other parts of the world including Africa and Asia. The company made history in 1972 with the launch of Anik A1, the world's first domestic communications satellite in geostationary orbit operated by a commercial company. Goldberg said he expects that 2010 will be the first year where more of Telesat's revenues will come from outside Canada than domestically. It costs about $300 million to build and launch a satellite. "The bigger you, are the more negotiating leverage you have with the people who build and launch satellites." Toronto-based credit-rating agency DBRS said the federal government's plan to ease foreign ownership restrictions would level the playing field for domestic players, DBRS says. "This would remove an inherent inequality for operators like Telesat, whereby foreigners are permitted to operate satellite services in Canada, while Canadian satellite operators remain subject to foreign ownership restrictions," DBRS said in a research note. DBRS said easing foreign ownership restrictions for satellite operators could serve as a trial for possible broader liberalization in telecom and media in the future. But DBRS also notes that any decision to loosen restrictions in the telecom, wireless and satellite sectors should be equally applied to the cable sector, which competes with telecom operators. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
