EADS Astrium has signed an agreement to acquire Guildford, United Kingdom–based Surrey Satellite Technology Limited (SSTL) from the University of Surrey.

SSTL designed and built the first Galileo In-Orbit Validation Element (GIOVE-A), the only European GNSS satellite currently on orbit. The company also is building a second GIOVE-A spacecraft under contract to the European Space Agency (ESA).

EADS Astrium has signed an agreement to acquire Guildford, United Kingdom–based Surrey Satellite Technology Limited (SSTL) from the University of Surrey.

SSTL designed and built the first Galileo In-Orbit Validation Element (GIOVE-A), the only European GNSS satellite currently on orbit. The company also is building a second GIOVE-A spacecraft under contract to the European Space Agency (ESA).

EADS Astrium, a leading European satellite manufacturer with more than 12,000 employees and a wholly owned subsidiary of the European Aerospace and Defence Systems company, numbers about 2,500 people in its UK operations.

SSTL is joining EADS Astrium following a decision by the University of Surrey to sell its majority stake of about 80 percent in the small satellite manufacturer. SSTL will remain an independent UK company with its individual brand after completion of the deal, which is subject to obtaining the relevant regulatory approval.

Under the share purchase agreement, valued at between £40–50 million (US$80–100 million according to one news report), SSTL will be owned by EADS Astrium NV in the Netherlands. In the financial year ended July 31 2006, generated £471,692 profit (before tax) on £21 million (US$42 million) turnover.

SSTL, which was set up by the University of Surrey as a commercial spinoff 22 years ago, now employs 270 people and specializes in the design and manufacture of small and micro satellites. SSTL executive chairman and one of its founders, Prof. Sir Martin Sweeting, indicated that the company needed additional funding to continue to succeed in the marketplace

“SSTL operates in a highly competitive global market,” said Sweeting. “If we are to continue changing the economics of space and provide the innovative solutions our customers demand we must expand and maintain our R&D investment. This acquisition strengthens SSTL enormously whilst preserving our unique approach to space.”

The purchase agreement also anticipates a long-term research collaboration between the University of Surrey and EADS Astrium that will allow Astrium to benefit from staff training and development opportunities afforded by the links with the University.

“This is a great move for both the University and SSTL,” says Professor Christopher Snowden, vice-chancellor of the university, noting that the deal “represent one of the largest cash spin-outs from any UK university” and that the school will continue to retain “a small stake” in SSTL. “It will also allow the company to realize its full potential as a rapidly growing and leading supplier of small and micro satellites, whilst the University retains the benefit of close interaction with SSTL and its new partner EADS Astrium.”

Reportedly, SSTL had been approached by — and rebuffed offers from — Germany’s OHB Technology and Thales Alenia Space, which are expected to compete with EADS Astrium for ESA contracts to develop Galileo’s space segment. Last December, OHB and SSTL announced an agreement to work together on the Galileo program, with OHB acting as prime contractor and supplier of the satellite platforms and SSTL as the navigation payload manufacturer.

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Europe’s Galileo program continues to take small steps as it waits to see if it can get through an impasse between the European Commission (EC) and the consortium of companies seeking a concession to complete and operate the Galileo system.

At its March 22 meeting, the European Council of Transport Ministers gave the consortium until May 10 “to ensure the conditions for the resumption of negotiations with the GNSS Supervisory Authority (GSA).” Failure to incorporate a Galileo Operating Company (GOC) and appoint a chief executive officer had led to a breakdown in the talks between the would-be public and private partners in the Galileo program.

According to industry representatives, a shareholder agreement has been reached among the eight consortium members effective the week of March 25, but neither a budget nor a CEO has been approved yet.

Reportedly, the consortium had identified a CEO candidate during a six-month search and negotiation process. However, the two months’ delay in incorporation of a GOC since an agreement was reached with the candidate may result in his not taking up the position.

In the meantime, Jean-François Bou, Galileo Program Director for France’s Thales Group, will continue as acting CEO of the concession consortium/GOC, a role that he assumed in June 2006.

Thales Acquisitions.

EC approval in early April of Thales bid to acquire Alcatel’s 67 percent stake in Alcatel Alenia Space (AAS) and its 33 percent share of Italy’s Telespazio may help simplify the complex industry relationships that have complicated work on Galileo.

Three Thales subsidiaries, AAS, and Telespazio’s parent company, Finmeccanica SpA of Italy are partners with EADS Astrium GmbH of Germany, the UKs EADS Astrium Ltd., Galileo Sistemas y Servicios of Spain (a consortium of seven Spanish companies) in the European Satellite Navigation Industries (ESNI) consortium. ESNI has a €1 billion–plus contract to the Galileo ground infrastructure and the first four in-orbit validation satellites.

Acquisition of Alcatel’s shares of AAS and Telespazio, together with its current 19 percent share in ESNI and its voting share in Alcatel Corporation, would give Thales a controlling share of ESNI and probably a larger voice in the concession consortium.

Meanwhile, the GSA Administrative Board has agreed on an “Intention To Proceed” (ITP) to adopt a multiplex binary offset carrier (MBOC) signal for the Galileo Open Service (OS). MBOC is a further refinement of the BOC(1,1) signal that the United States and European Union (EU) had agreed would serve as the common signal waveform for the most commonly used civil signals at the L1 frequency.

The ITP, however, is only the first step of the process for a final decision on the long-awaited common signal structure, which needs to be finalized before receiver manufacturers can design new equipment incorporating the GPS and Galileo signals. Several more official steps, legal checks, and agreements must take place before the GSA can render the definitive “Decision To Proceed.”

Ultimatum from the Top

The transport council took up the Galileo program at its March 22 meeting, following a pointed letter to the consortium from Jacques Barrot, the council’s president and vice-president of the EC, which is leading public participation in Galileo.

In it the council said it “expects substantial progress to be achieved in the negotiations, so that . . . the Council has adequate assurance that the concession negotiations are going ahead successfully, in particular on the basis of a credible roadmap to come to contractual conclusions as soon as possible.”

The council pointed to its June 7–8 meeting as a deadline for receiving the EC’s assessment of the overall progress of the Galileo program, including the outstanding issues raised by the consortium in its response to Barrot as well as the project cost and financing.

Also for the June meeting, the EC was asked to submit possible solutions for securing Galileo’s long-term public financial obligations, including a scenario for the earliest start up of European Geostationary Overlay Service (EGNOS) as a precursor to Galileo. Similar to the U.S. Wide Area Augmentation System or WAAS, EGNOS is designed to provide integrity alerts and differential corrections that will provide real-time positioning accuracy of around two meters.

Currently in pre-operational service, EGNOS will be certified in 2008 for safety-of-life applications such as air traffic control. However, funding for the program is expected to run out by March 2008.

Finally, the transport council asked the EC, assisted by GSA and the European Space Agency, to assess progress in the concession negotiations and to submit alternative scenarios — including assessments of associated costs, risks, and affordability — for the June council meeting.

Copyright 2007 Gibbons Media and Research LLC

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