Astrium Faces Tight Deadline To Get Skynet 5 in Service

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PARIS — Astrium Services, which specializes in providing jam-proof, encrypted satellite telecommunications services to British, German and other military forces, reported a 50-percent increase in revenue in 2006 and said its backlog is equivalent to 13 years of sales.

The company, which is a subsidiary of EADS Space, hopes that the launch this year of two large satellites it is managing for Britain will unlock opportunities to do business with the U.S. Defense Department.

Astrium Services’ revenue in 2006 totaled 270 million euros ($351 million). The company’s backlog as of Dec. 31 stood at 3.6 billion euros. The key new order in 2006 was Astrium Services’ 74.9 percent share of a 10-year, 900-million-euro contract from the German Defense Ministry for two telecommunications satellites and ground services.

The first of the German military satellites is scheduled for late 2008 or early 2009.

Astrium Services’ immediate priority is the launch of Britain’s first Skynet 5 satellite. The company is facing a financial penalty from the British Defence Ministry if it does not have Skynet 5A in service by the end of March.

The satellite currently is scheduled for launch March 9 aboard a European Ariane 5 ECA rocket alongside India’s Insat 4B telecommunications satellite.

Astrium Services Chief Executive Eric Beranger said Skynet 5A manufacturer Astrium Satellites has given assurances that it will do its utmost to perform in-orbit checkout so that the satellite is made operational as soon as possible once in orbit.

The launch was supposed to occur in mid 2006. Its most recent delay was due to the Insat 4B satellite’s late arrival at the Guiana Space Center launch site in French Guiana.

“We have our feet to the fire on this one,” Beranger said during a press briefing here Feb. 13, saying the company will be responsible for purchasing alternative satellite capacity if Skynet 5A is not available by late March. “For the moment we are reasonably optimistic we can be in service in time.”

The company faces another deadline in March 2008, when the second Skynet 5 satellite — also scheduled for a dual launch aboard an Ariane 5 rocket — must be in orbit. Beranger said Astrium Services is trying to secure a late-2007 launch.

Beranger and Astrium Services Vice President Jean-Francois Gambart said the company is optimistic that the U.S. Defense Department will order capacity from Skynet 5 once the satellite has proved itself in orbit. U.S. sales are handled by EADS North America.

The British Skynet 5 program is the centerpiece of Astrium Services’ business. Through its British subsidiary, Paradigm Secure Communications, Astrium Services is under contract to provide specific amounts of in-orbit capacity to British defense forces through 2020.

The initial Skynet 5 contract, signed in October 2003, was valued at 2.5 billion British pounds ($4.9 billion) and was scheduled to include two insured Skynet 5 satellites in orbit, plus the upgrade, maintenance and operations of a Skynet ground network through 2018. The contract also included operations of the remaining Skynet 4 satellites and an upgrade of their ground installations to increase telecommunications throughput.

In December 2005, the contract was extended by two years, to 2020, and substantially increased in value — to 3.6 billion pounds, or $7 billion at current exchange rates. In return for the extension, Paradigm and Astrium Services decided to order a third Skynet 5 satellite and to forgo taking out in-orbit insurance on the first two spacecraft. Company officials said building and launching a third Skynet 5 is less expensive than full in-orbit insurance on two Skynet 5 spacecraft. Each Skynet 5 satellite will have 15 SHF channels and 9 UHF channels and is designed to operate for 15 years.

The Skynet 5 contract’s milestones, which Astrium Services and Paradigm have met up to now, began in February 2005 with the in-service date of ground installations for the Skynet 4 satellites.

In addition to providing a stable revenue stream stretching over a decade, the Skynet 5 contract provided Astrium Services a springboard from which to pursue other business.

In November 2004 the company was part of a three-member team that won a 15-year services contract with the NATO alliance to provide SHF and UHF satellite capacity. The contract to the joint British-French-Italian bid, signed with the three governments, was valued at $594 million. The Astrium Services/Paradigm share was estimated at about $194 million.

If Astrium Services and Paradigm miss the Skynet 5A in-service deadline, the company will be obliged to purchase capacity from either a commercial satellite operator or the French government, whose Syracuse 3A and 3B spacecraft are in orbit and represent France’s contribution to the NATO contract.

France was obliged to use capacity on the Skynet 4 satellites in 2005 to fulfill its NATO contract obligations because of delays in the Syracuse 3A launch. More recently, the Italian Defense Ministry was forced to do the same thing following partial failure of Italy’s Sicral 1 satellite.