JSAT Corp. of Japan and PanAmSat Corp. of the United States are expanding their partnership to form a joint venture to launch a Ku-band telecommunications satellite into a PanAmSat-licensed orbital slot over the United States in 2007.
The two companies expect to select a manufacturer for the satellite, Horizons-2, this year. It will be placed into PanAmSat’s orbital slot at 74 degrees west longitude to replace the SBS-6 satellite, which is already operating beyond its expected retirement date.
JSAT of Tokyo has agreed to shoulder most of the early spending for the $140 million project on behalf of the joint venture, called Horizons-2 Satellite LLC. PanAmSat’s initial contribution will be the orbital slot and the North American sales force that will market Horizons-2 services, as well as the ground teleports to steer services between the satellite and its users. As the satellite’s construction nears completion, PanAmSat will begin making capital outlays needed for Horizon-2’s launch and insurance.
“JSAT will begin making installment payments on the $140 million investment, but both JSAT and PanAmSat will be responsible for purchasing the satellite, buying launch services and purchasing insurance,” JSAT spokesman Michiaki Maruyama said. “The business is going to be a joint venture. Revenues will also be shared on a 50-50 basis.”
In a June 27 statement, PanAmSat said the financial arrangement with JSAT enables PanAmSat to launch a new satellite “with no capital outlays during the two-year construction period and to make its part of the $140 million investment on terms that are significantly better than its current cost of financing.”
PanAmSat spokewoman Kathryn Lancioni said PanAmSat’s cash outlays essentially will repay JSAT for its investment. She said the two partners expect to be able to fit the construction, launch and insurance of the satellite into a $140 million budget by continuing PanAmSat’s recent policy of purchasing smaller spacecraft. The company has an existing purchase option for a telecommunications satellite with Orbital Sciences Corp. of Dulles, Va., which previously has built satellites weighing less than 2,000 kilograms for PanAmSat.
PanAmSat, which recently completed an initial stock offering and is promising investors a relatively high annual cash dividend, has said it plans to keep its capital spending at less than $200 million a year in the coming years.
PanAmSat’s SBS-6 satellite now occupies the company’s 74 degrees west position, but it was launched in 1990 with a planned 10-year service life and is now devoted mainly to occasional-use services for customers including PanAmSat’s G2 Satellite Solutions subsidiary, which is dedicated to government business. Lancioni said SBS-6 has enough fuel to remain operational until Horizons-2 is launched.
PanAmSat had planned to move SBS-6 business to other satellites, but agreed to the Horizons-2 deal following robust demand for high-definition television and Internet services.
Wilton, Conn.-based PanAmSat and JSAT formed the Horizons partnership in 2001 and launched their first jointly owned satellite, Horizons-1, in September 2003. Horizons-1 provides C-band video broadcasting under the name of Galaxy 13 and licensed in the United States, and Ku-band telecommunications under the Horizons-1 label licensed by Japanese regulators.
