Artist's image of MDA Corp's Radarsat-2Canada’s MDA Corp., with little debt and now entering a period of predictably strong cash flows, believes its money is better placed investing in a future in-orbit satellite servicing business — something that has never been attempted — than in repurchasing its stock or increasing shareholder dividends, MDA Chief Executive Daniel E. Friedmann said May 5.
In the clearest indication yet that MDA believes it has found a sustainable satellite-servicing business model that has eluded everyone else, Friedmann said the Richmond, British Columbia-based company plans a major investment in the business starting late this year.
In a conference call with investors, Friedmann did not say how much MDA thinks it will need to finance a first robotic mission to deliver fuel or to perform another service on a satellite in orbit. He said “it may be more or less than” an investor’s guess of 200 million Canadian dollars ($195 million).
But he said the more the company investigates the business, the more potential missions, both commercial and military, it finds for a robot capable of attaching itself to a satellite in orbit.
“Certainly talking to defense customers, we’ve discovered markets we didn’t know we had an opportunity to go after,” Friedmann said. “It will be a significant use of capital for organic growth. That’s our first [near-term investment] priority as we work through the spring and summer to finalize it.”
MDA will likely withhold significant further cash investment until at least one firm customer signs up for a mission. But for now, the company is telling its shareholders that in-orbit servicing is MDA’s most promising new business venture.
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