Intelsat remained top of the heap among commercial satellite operators in 2012 based on U.S.-dollar revenue, maintaining its lead over rival SES. Can it last?

The question for Intelsat is how to maintain enough growth to pay down its debt and persuade its investors, new and old, that the company’s best days are not behind it.

Luxembourg- and Washington-based Intelsat’s U.S. government business, which accounts for about 19 percent of revenue and 13 percent of its EBITDA, or earnings before interest, taxes, depreciation and amortization, does not look promising in the short term.

Up to now, the reductions in U.S. government use of commercial capacity have affected mainly those Intelsat contracts that feature non-Intelsat satellite capacity. But Chief Executive David McGlade has warned investors that the pressure on the U.S. Defense Department budget could extend to capacity Intelsat provides on its own satellites.

Longer term, a more cost-conscious U.S. government customer may wish to increase its reliance on commercial capacity and reduce its outlays for dedicated military satellites. But that remains to be seen.

Intelsat conducted its long-planned initial public offering of stock in April on the New York Stock Exchange, raising a net $550 million that, when combined with two insurance claims with a combined value of $491 million, should accelerate the de-leveraging that Intelsat has set as a priority. The current low-interest rate environment in the United States will help there, too, as Intelsat gradually moves its debt to lower-cost facilities.

Is Intelsat’s Epic satellite product line a magic bullet? The company has promised that capital spending will be going down but that the five satellites ordered from Boeing Space and Intelligence Systems of El Segundo, Calif., will offer high-throughput capacity in C- and Ku-band.

One of these satellites, the Intelsat 29e, will have the equivalent of 270 standard 36-megahertz transponders. The company has booked more than $500 million in backlog for its initial Epic offer from customers managing maritime and aeronautical communications.


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Peter B. de Selding was the Paris Bureau Chief for SpaceNews.