Loral Space & Communications Inc., together with its subsidiaries, is a
leading satellite communications company engaged, through our ownership interests
in affiliates, in satellite-based communications services.
Loral has one operating segment consisting of satellite-based communications
services.
Loral participates in satellite services operations primarily through its 62.7%
economic interest in Telesat Canada (“Telesat”), a leading global
satellite operator. Effective January 1, 2017, Telesat Holdings Inc. completed
a corporate reorganization pursuant to which Telesat Holdings Inc. amalgamated
with Telesat Interco Inc., a wholly owned subsidiary, and immediately thereafter
the newly amalgamated company amalgamated with Telesat Canada. The continuing
entity, existing under the laws of Canada, is named Telesat Canada.
Telesat owns and leases a satellite fleet that operates in geostationary orbit
approximately 22,000 miles above the equator. In this orbit, satellites remain
in a fixed position relative to points on the earth’s surface and provide
reliable, high-bandwidth services anywhere in their coverage areas, serving
as the backbone for many forms of telecommunications. Telesat is also developing
a global constellation of low earth orbit (“LEO”) satellites. LEO
satellites operate in a circular orbit around the earth with an altitude typically
between 500 and 870 miles. Unlike geostationary orbit satellites that operate
in a fixed orbital location above the equator, LEO satellites travel around
the earth at high velocities requiring antennas on the ground to track their
movement. LEO satellite systems have the potential to offer a number of advantages
over geostationary satellites to meet growing requirements for broadband services,
both consumer and commercial, by providing increased data speeds and capacity,
global coverage, and latency on par with or potentially better than terrestrial
services.
Telesat provides video distribution and direct-to-home (“DTH”)
video, as well as end-to-end communications services using both satellite and
hybrid satellite-ground networks.
Telesat earns the majority of its revenues by providing satellite-based services
to customers, who use these services for their own communications requirements
or to provide services to customers further down the distribution chain for
video and data services. Telesat also earns revenue by providing ground-based
transmit and receive services, selling equipment, installing, managing and maintaining
satellite networks, and providing consulting services in the field of satellite
communications. Telesat categorizes its revenues into: Broadcast, Enterprise,
and Consulting and Other.
Telesat’s broadcast services business provided approximately 51% of
its revenue for the year ended December 31, 2017. These services include:
DTH: Both Canadian DTH service providers (Bell TV and Shaw Direct) use Telesat’s
satellites as a distribution platform for their services, delivering television
programming, audio and information channels directly to customers’ homes.
In addition, Telesat’s satellites are used by EchoStar/DISH Network for
DTH services in the United States.
Video distribution and contribution: Broadcasters, cable networks and DTH service
providers use Telesat satellites for the full-time transmission of television
programming. Additionally, Telesat provides certain broadcasters and DTH service
providers bundled value-added services that include satellite capacity, digital
encoding of video channels, authorization services and uplinking and downlinking
services to and from Telesat satellites and earth station facilities.
Occasional use services: Occasional use services consist of satellite transmission
services for the timely broadcast of video news, sports and live event coverage
on a short-term basis enabling broadcasters to conduct on-the-scene transmissions
using small, portable antennas.
Telesat’s enterprise services provided approximately 46% of its revenue
for the year ended December 31, 2017. These services include:
Telecommunication carrier and integrator services: Telesat provides satellite
capacity and end-to-end services for data and voice transmission to telecommunications
carriers and integrators located throughout the world. These services include
space segment services and terrestrial facilities for broadband, internet backhaul,
cellular backhaul and services such as rural telephony to telecommunications
carriers and network services integrators around the world.
Government services: The United States government is the largest single consumer
of fixed satellite services in the world and a user of Telesat’s international
satellites. Telesat provides services to the United States government through
government service integrators, rather than directly to United States government
agencies. Telesat is also a significant provider of satellite services to the
Canadian government.
Consumer broadband services: Telesat provides Ka-band satellite capacity to
customers in Canada, particularly to Xplornet Communications Inc., which uses
it to provide two-way broadband internet services, and to ViaSat, Inc. (“ViaSat”),
which uses it to provide similar services in the United States. Telesat also
provides Ku-band satellite capacity to Hughes Network Systems LLC (“HNS”),
which uses it to provide two-way broadband internet services in South America.
HNS has also contracted for all of the Ka-band capacity serving South America
on Telesat’s Telstar 19 VANTAGE satellite currently under construction.
Resource services: Telesat provides communications services to geographically
diverse locations, both on and off shore, for the oil and gas and mining industries.
Maritime and aeronautical services: Telesat is increasingly providing satellite
capacity to customers serving the growing maritime and aeronautical markets
bringing broadband communications services to commercial airplanes and vessels.
Retail services: Telesat operates VSAT and hybrid VSAT/terrestrial networks
in Canada providing end-to-end services including installation and maintenance
of the end user terminal, maintenance of the VSAT hub and provision of satellite
capacity. These networks include the support of point-of-sale and other applications
at thousands of retail petroleum sites.
Satellite operator services: Telesat provides services to other satellite operators
in the form of partial channel satellite capacity, full transponder satellite
capacity and, on occasion, the relocation and use of an entire satellite at
a designated orbital location to preserve their spectrum rights.
%
3.26% 