Astrium Picked To Build DirecTV 15 Telecom Satellite

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PARIS — Astrium Satellites of Europe, in a rare contract win in North America, will build the large DirecTV 15 television broadcasting satellite for DirecTV Group under a contract announced Nov. 4 by both companies.

DirecTV said Nov. 3 that it is accelerating the launch of its DirecTV 14 and the just-ordered DirecTV 15 spacecraft to protect against the possible in-orbit failure of DirecTV 10, whose primary propulsion system failed this summer.

DirecTV 10 is now using its backup propulsion system and is operating normally, DirecTV Chief Financial Officer Patrick T. Doyle said in a conference call with investors. DirecTV 14, under construction by Space Systems/Loral of Palo Alto, Calif., is scheduled for launch in early 2014. DirecTV 15 is scheduled for launch in late 2014, DirecTV said.

DirecTV 15, which will be Astrium’s first satellite for the largest U.S. satellite television broadcaster, will use Astrium’s Eurostar 3000 platform and will carry 30 high-power transponders in Ku-band, 24 transponders in Ka-band and 18 transponders in the so-called reverse band using spectrum at 17 and 24 gigahertz.

The reverse band has long been used for satellite uplink signals. In response to requests from industry, the U.S. Federal Communications Commission (FCC) and international regulators have freed this spectrum for downlink services as well, a decision that could free up additional spectrum for satellite operators.

DirecTV 15 is expected to weigh 6,300 kilograms at launch and will deliver 16 kilowatts of power to its payload at the end of its 15-year service life.

Europe’s two principal commercial satellite manufacturers, Astrium Satellites and Thales Alenia Space, have been successful on the worldwide market but have struggled to establish a foothold in North America, in part because of the high value of the euro against the U.S. dollar.

Philip Goswitz, DirecTV senior vice president for space and communications, said his company is “pleased to begin a new relationship with Astrium … which has a solid reputation for technical excellence and high reliability.”

DirecTV 10’s propulsion issue is not the first glitch aboard the satellite since its July 2007 launch. DirecTV said it suffered an on-board failure of a portion of its payload that made it unable to provide the expected capacity to certain markets.

DirecTV 10 is a Boeing 702 model satellite designed to operate for 15 years in orbit. In a Nov. 3 filing with the U.S. Securities and Exchange Commission (SEC), DirecTV said if the satellite’s propulsion system fails altogether, it would be obliged to record an impairment charge for the satellite’s book value, which as of Sept. 30 was $274 million.

DirecTV has the equivalent of four satellites under construction that will cost a total of $1.729 billion including launch and insurance, plus $74 million paid already in 2011, the company said in its SEC filing. Future payments will total $83 million in 2011, $343 million in 2012, $334 million in 2013, $145 million in 2014, $116 million in 2015 and $708 million in subsequent years.

While the DirecTV 14 and DirecTV 15 contracts were structured as conventional procurements, DirecTV’s two other satellites, called ISDLA-1 and ISDLA-2, are being purchased from Space Systems/Loral by satellite fleet operator Intelsat of Luxembourg and Washington. Intelsat is leasing two satellites’ Ku-band capacity — a total of 144 transponders — to DirecTV for the satellites’ 15-year service lives, while retaining 10 C-band transponders on each for its own use.

Both satellites being leased from Intelsat will serve DirecTV Latin America, whose growth and profitability have outpaced the company’s previous estimates.

DirecTV Latin America Chief Executive Bruce Churchill said during the Nov. 3 conference call that the company had made about $75 million in prepayments for these two satellites as of Sept. 30. Under the lease arrangement, he said, DirecTV would be making annual payments of about $100 million through 2014, followed by lower monthly fees to be paid for the satellites’ remaining service lives.

El Segundo, Calif.-based DirecTV on Nov. 3 reported that its U.S. and Latin American operations added a combined 1.14 million net subscribers in the three months ending Sept. 30. The Latin American division accounted for more than 800,000 of these new subscribers when Sky Mexico, in which DirecTV has a 41 ownership stake, is included.

Average monthly revenue per subscriber for DirecTV Latin America increased 11.8 percent, to $63.58, for the nine months ending Sept. 30. The division’s operating profit margin rose to 18.7 percent of revenue compared with 17.1 percent a year earlier.

The monthly subscriber revenue also increased for the U.S. business, rising to $90.48 per month on average for the nine months ending Sept. 30. The operating profit margin of DirecTV U.S. was 17.3 percent of revenue for the nine-month period, compared with 16.5 percent a year ago.

DirecTV Chief Executive Michael D. White said during the call that the company is open to partnering with anyone — including rival Dish Network and its EchoStar hardware supplier — to provide a wireless broadband service in the United States. But he said the wireless broadband market situation remains difficult to read.

“It is clear to me there is a whole lot of confusion going on in the world about spectrum,” White said. “Is T-Mobile going to go through? What is going to happen to Clearwire? Is the LightSquared spectrum going to work?”