PARIS -- Start-up satellite operator ProtoStar Ltd. has begun
talks with SES of Luxembourg over the sale of the just- launched IndoStar
2/ProtoStar-2 satellite to permit ProtoStar-2 creditors to cash out of their
investment and avoid the long battle for satellite frequency rights that has
undermined the company's ProtoStar-1 satellite launched in mid-2008, according
to industry officials.
ProtoStar-2 is a Boeing 601HP model satellite that was
originally designed in 2000 for Intelsat's Latin American business before being
placed, nearly completed, in storage for four-and-a-half years and then resold
to Bermuda- and San Francisco-based ProtoStar in 2007.
The refurbished spacecraft, originally intended to carry an
all-Ku-band payload, is now equipped with 27 Ku-band transponders and 13 S-band
transponders, the latter intended to replace the aging IndoStar 1/Cakrawarta 1
satellite launched in 1997.
IndoStar 2/ProtoStar-2 is intended to operate at 107.7 degrees
east. While that slot poses no frequency conflicts in the little- used S-band,
ProtoStar's principal Ku-band business plan has been stymied by satellite
operators with higher priority Ku-band reservations there with the
International Telecommunication Union (ITU).
SES's NSS-11 satellite in particular, at 108.2 degrees, is just
a half-degree away from the IndoStar 2/ProtoStar-2 and SES has made clear to
the ITU that it intends to develop the slot to the full extent of its frequency
registration filings.
Robert Bednarek, president of SES Americom New Skies, the SES
division that operates NSS-11, said May 19 that the company is seeing increased
demand for television broadcasts from China,
the Philippines
and elsewhere within the coverage area of NSS-11 and will be expanding its
capacity at the 108-degree position.
"Audiences continue to grow, which makes follow-on capacity
increasingly valuable," Bednarek said during a presentation to SES investors in
London. "We have additional
spectrum ... especially at 108 degrees. As we develop that orbital location, it
wouldn't be a surprise to see us add some additional satellite capacity at or
near that location."
What value SES would be willing to place on ProtoStar-2 now
that it is healthy and in orbit remains unclear. The satellite's S-band payload
likely presents little interest to SES.
For ProtoStar, a sale to SES would permit the company to end
what industry officials say is an uphill fight to secure Ku-band frequency
rights in the region at a time when ProtoStar's creditors are already showing
signs of impatience.
Whether timed to coincide with the launch or not, one of
ProtoStar's key partners announced May 18 that it was scrapping plans to invest
in the company and to engage in a broader strategic relationship.
In a letter to the Philippine Stock Exchange dated May 15 and
published May 18, the Philippine Long Distance Co. (PLDT) said it has canceled
agreements under which ProtoStar would lease capacity on PLDT's existing
satellite and take control of the satellite's customer contracts and ground
assets in exchange for ProtoStar stock, and PLDT would make a separate cash
investment in Protostar.
PLDT said it had notified ProtoStar on May 12 that it was
terminating the transponder-lease agreement "due to non-fulfillment of certain
closing conditions."
The announcement further complicates ProtoStar's situation. The
company's first satellite, ProtoStar-1, launched in July 2008, faces continued
difficulties in coordinating its planned broadcasts so as to avoid frequency
interference and has been unable to secure many customers. ProtoStar-1
bond-holders are seeking strategic alternatives for the operation.
PLDT had been scheduled to transfer control of the Agila 2
satellite, set to be retired in 2010 or 2011, to ProtoStar. ProtoStar had set
up a subsidiary, called ProtoStar 3, that was to manage the PLDT relationship,
and in particular to develop the PLDT-owned
Subic Space Center
for satellite operation and control. As part of this agreement, PLDT was to
have received $22.5 million in ProtoStar preferred stock.
The company did not spell out what conditions were not met, but
when the agreement was signed last September PLDT said the deal was conditioned
on the "requisite regulatory approvals and certain consents."
The same September agreement included a second chapter under
which PLDT would purchase $27.5 million in ProtoStar preferred stock. The PLDT
letter said simply that the company is not exercising its share-purchase
option.
PLDT said it is retaining its relationship with ProtoStar to
assure continued service to customers of PLDT's 67-percent owned subsidiary,
Mabuhay Satellite Corp., which operates Agila 2.
PLDT, through Mabuhay, still plans to lease four C-band
transponders and one non-pre-emptible extended-C-band transponder on ProtoStar-1
from 2011 to 2017, the letter said.
The letter said Mabuhay and ProtoStar "are nonetheless in
continued discussions to determine and arrive at the appropriate operating
agreements to govern the collaboration ... in various areas such as marketing
and sales, and in providing of backup TT&C [telemetry, tracking and
control] and [operating] services for ProtoStar's satellites, among others."
El Segundo, Calif.-based Boeing Satellite Systems International
announced May 18 that ProtoStar-2 was operating as planned in orbit following
the launch aboard an International Launch Services Proton rocket from Russia's
Baikonur Cosmodrome in Kazakhstan.
ProtoStar-2 builder Boeing Satellite Systems International
expects to complete in-orbit testing in time to deliver ProtoStar-2 to its
owners by early July.
ProtoStar spokesman Reid Stephenson did not respond to a
request for comment on the possible sale of ProtoStar 2. SES spokesman Yves
Feltes said the company would have no comment.
