The future is looking bright for Telespazio. The Italian joint venture, one of two companies formed when Alcatel and Finmeccanica merged their respective space activities, (SN, Jan. 31) concentrating on operations and services for satellite solutions and is aiming to become a major player in the European satellite services landscape.

“Up to now, Telespazio has been focusing almost solely on the domestic market here in Italy,” Telespazio CEO Giuseppe Veredice told Satellite News in an exclusive interview. “The goal of the Alcatel/Finmeccanica joint venture is to expand our business into new territories. Telespazio will benefit from not only having Finmeccanica behind it but now having the assistance of Alcatel, which is a global player with strong market penetration.”

In April, the European Commission gave its formal approval for the creation of the two companies, Alcatel Alenia Space and Telespazio. Veredice, who played a key role in the merger, was appointed CEO of Telespazio.

“The idea was to have an integrated group in the space sector, first in Europe and then the world, which would be based on two pillars,” Veredice said. “The first one, Alcatel Alenia Space, of which Alcatel holds 67 percent and Finmeccanica 33 percent, will concentrate on design, development and manufacturing of space systems, satellite, equipment, etc. The second one, Telespazio, of which, Finmeccanica holds 67 percent and Alcatel 33 percent will concentrate on operation and services for satellite solutions, that is, control of space systems as well as value-added services for networking, multimedia and Earth observation.”

Analysts’ View

Analysts see the merging of Alcatel’s and Finmeccanica’s space segments as a positive move. One equity analyst who requested anonymity told Satellite News, “I believe that is a good thing for Finmeccanica. I believe that by merging their activities with Alcatel, they will be able to have a large exposure to the space business and be a strong competitor to EADS. Finmeccanica’s performance in the space sector has been quite disappointing. I don’t think it is necessarily a problem of Finmeccanica, but more of the space business, so I would not be very concerned by that. By merging their activities with Alcatel, which has a strong knowledge of the space businesses, Telespazio will be able to attract more customers.”

The customers will come from institutional players and governments, the analyst said. “I think the best way to approach the space business is to have a global approach, rather than an Italian approach. By being larger, Telespazio will be a credible candidate compared to other players. They will still have an advantage in the Italian market but it is more interesting to look at the global environment.”

Georges Memmi, a technology equity analyst at Deutsche Bank, also believed the consolidation made sense from a Finmeccanica point of view. “The space industry in the last few years has been quite a weak area for Finmeccanica with the downturn in the satellite market,” he said. “As such, I think this link-up with Alcatel was something that was needed. They have done a good job in restructuring the business and this is a good opportunity for them to streamline the business and hopefully with the market picking up, generating some good returns in this business.”

Italian Broadband Satellite?

While Telespazio will look to play more of a role outside Italy, the company still wants to improve its services in country, in particular in the broadband segment. Veredice said.

“Broadband is one of the key programs for the European Space Agency (ESA) for the coming years,” Veredice said. “Broadband is the basis for a large number of applications. Telespazio in terms of services is very interested in developing these applications and we are interested in pushing the Italian Space Agency to launch a satellite dedicated to broadband services.”

In terms of potential new satellites, Veredice said the company was committed to overcapacity reduction. “It is a concern that there is overcapacity of 30 to 35 percent on some of the satellite fleets,” he said. “Alcatel and Finmeccanica have stressed the importance of Telespazio in contributing to overcapacity reduction.”

Telespazio also hopes its combination with Alcatel will lead it to playing a more important role in some of Europe’s major space projects over the next few years. “In terms of the institutional market, this is a good time for satellite-based applications,” Veredice said. “As you know in Europe, we have a number of important programmes such as Global Monitoring for Environment and Security and the European navigation system, Galileo. This will generate a very impressive number of opportunities. It is important that these new programs are based on the expectations and needs coming from the institutional sector.”

Galileo

In particular, the Galileo project is one project Telespazio hopes to play a major role in. Many were surprised about the recent decision of the Galileo Joint Undertaking (GJU) to extend negations with both consortia instead of awarding the concession March 1 as it was originally planned.

Veredice said this was sensible on the part of the GJU. “Up to now, it has been helpful for ESA and the European Commission to have two consortia, which have been deeply involved in highlighting opportunities and constraints related to this program. But going forward, it is clear that the interest of all of the stakeholders is to [be able] to guarantee the success of the program. My idea is that we have to work together with the same goals. It is not a question of winners and losers. It is a question of identifying an entity, which should assure the completion of the constellation on one side and the development of the applications on the other side.”

Veredice believes a combination of all the relevant parties could be a key factor in the success of Galileo. “”It is clear that the involvement of all the competences existing in Europe is by itself a guarantee of success,” he said. “The European industries represented in the two consortia are used to working together and the program can benefit from all the skill sets of the companies involved.”

–Mark Holmes

(Georges Memmi, Deutsche Bank, +44 207 545 8000; Roberto Alatri, Finmeccanica, roberto.alatri@Finmeccanica.com)