2006 Satellite Orders Surpass Forecasts Despite Consolidation

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PARIS – Twenty-seven geostationary-orbiting commercial telecommunications satellites were ordered in 2006, a total that bested all but the most optimistic forecasts and far surpassed the 19-satellite tally in 2005.

The continued consolidation among satellite-fleet operators, long expected to reduce overall satellite demand, has been matched by the emergence of new operators – some along the national flag-carrier lines of the 1970s and 1980s, and some with purely commercial ambitions.

Marking a trend that has been long anticipated, 2006 was a year in which Chinese and Indian satellite manufacturers moved closer toward having a regular presence in a market dominated by four
U.S. and two European companies.

Beijing-based China Aerospace Corp., in a deal that resembles its first export sale to
Nigeria, signed a contract with Venezuelan government authorities for a large telecommunications satellite based on the new DFH-4 satellite platform. As is the case with Nigcomsat-1 for
Nigeria, the Venesat-1 contract with Venezuela is a turnkey deal that includes a launch aboard a Chinese Long March rocket.

China‘s emergence in the market may be slowed by the still-unexplained in-orbit problems of the first DFH-4 model, Sinosat-2, which was launched Oct. 29. The nature and extent of the anomalies on this satellite have not been clearly explained by either the manufacturer or the owner, Sinosat Communications Co. Ltd. of Beijing.

But if China‘s launch-vehicle development provides any guide, the Chinese will not slow their efforts in telecommunications satellite development for any extended period despite problems with newly introduced hardware.

China‘s ambitious simultaneous development of several launch vehicles in the mid-1990s resulted in failures.

China pursued development and since then has been able to master the relevant technologies.

Meanwhile, India‘s Antrix Corp., part of the Indian Space Research Organisation (ISRO), has teamed with Astrium Satellites of Europe to offer a relatively small commercial telecommunications satellite product that competes directly with Orbital Sciences Corp.’s Star platform. The Astrium-ISRO joint venture posted two wins in 2006.

ISRO had considered a similar arrangement with Boeing several years ago, but that attempt collapsed because of U.S. technology-transfer restrictions. Astrium Chief Executive Antoine Bouvier said that while the first two orders for the joint venture are for European customers, ultimately the Astrium-ISRO partnership should be able to pick up orders in India as well.

Any listing of commercial satellite orders runs up against definitions of what constitutes a commercial order. ISRO’s order of a new Insat satellite from Antrix, for example, is not included here because while the satellite will have commercial applications, no other manufacturers were invited to bid for the work.

One of the sales included in this year’s list, the Hylas satellite ordered from Astrium by Avanti Screenmedia of Britain, is unusual because it followed investment by the European Space Agency and the British National Space Centre, in addition to an in-house investment by Astrium, in flexible satellite payloads.

While Avanti, which is publicly traded, is operated as a fully commercial business, it is unlikely that the British agency would have permitted a contract with a company outside of Britain.

China‘s Venezuelan satellite contract also has special features tied to Venezuela‘s oil exports to
China that make it atypical.

The Venezuelan order is one of several from satellite operators that have no existing fleets, again demonstrating that up to now, for just about every merger or acquisition in the sector, a new player is created. Other start-up companies making orders in 2006 include Ciel Satellite Group of
Canada, Vietnam Posts and Telecommunications Group, Terrestar Networks and Avanti.

Rick Masoni, executive vice president of Lockheed Martin Commercial Space Systems, said the exit of private-equity groups from ownership of satellite operators is having the effect of stimulating interest in new satellite applications after a period of cost saving. Masoni said Lockheed Martin forecasts 16-18 new orders in 2007, with around a third of them for new applications and the rest to replace existing capacity in orbit.

Limited to satellites intended for geostationary orbit, this year’s compilation does not highlight the apparent return of two low-orbiting commercial constellations – Orbcomm and Globalstar. Alcatel Alenia Space President Pascale Sourisse said Alcatel’s $800 million contract to build a second-generation Globalstar satellite-telephone constellation shows that the commercial telecommunications market cannot be defined only by geostationary satellites.