Intelsat To Contract New Satellite for South Africa’s MultiChoice

by

PRAGUE — Satellite fleet operator Intelsat on June 11 said it had reached an agreement with African pay-TV provider MultiChoice to build a C- and Ku-band satellite to be co-located at an existing Intelsat orbital slot and launched in late 2016.

Under the agreement, Luxembourg- and Washington-based Intelsat is leasing to MultiChoice the satellite’s entire Ku-band payload of around 30 transponders for the satellite’s full 15-year service life. Called Intelsat 36, the spacecraft will be co-located with the Intelsat 20 satellite at 68.5 degrees east. Intelsat will have the use of the approximately 10 C-band transponders.

Johannesburg, South Africa-based MultiChoice has agreed to make much of its lease payment in advance of the satellite’s launch — between $75 million and $100 million between 2014 and 2016, according to a June 11 Intelsat filing with the U.S. Securities and Exchange (SEC).

Intelsat’s share in the cost of the satellite’s construction will be structured so that the company’s capital spending plan as explained to investors will increase by only $50 million in 2014, but remain the same for 2015 and 2016, the company said in its SEC filing.

Intelsat Investor Relations Vice President Dianne J. VanBeber said June 12 that the company’s capital spending forecasts have always included some margin for unplanned spending, and that Intelsat 36, a small satellite costing no more than $225 million including its construction, launch and insurance, can be fitted into the three-year spending plan without increasing it beyond the $50 million this year.

Intelsat said its capital spending this year will rise by $50 million, to between $625 million and $700 million. Spending in 2015 will remain at the previously forecasted $775 million to $850 million, and spending in 2016 remains at the previously announced $625 million to $700 million.

Intelsat also promised investors that the new spacecraft will not affect the company’s plans to pay down about $400 million in debt in 2014.

VanBeber said a choice of satellite manufacturer and launch service provider had not yet been made. Finding a manufacturer to deliver a spacecraft, and a commercial rocket provider to launch it, all before the end of 2016 will put the satellite and rocket providers on a tight schedule.

Intelsat’s high debt load has put the company in a straightjacket in the past couple of years in terms of growth potential. Its two closest competitors in terms of geographic reach and financial strength — SES of Luxembourg and Eutelsat of Paris — both have ordered satellites to take advantage of growth markets in emerging markets, especially Latin America.

The MultiChoice agreement is one way of slipping those bonds, if only modestly given the amount of C-band capacity Intelsat 36 will add to the company’s current fleet.

 

Follow Peter on Twitter: @pbdes