Astrium Services Reaches Billion-Dollar Milestone in 2008

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  Space News Business

Astrium Services Reaches Billion-Dollar Milestone in 2008

By PETER B. de SELDING
Space News Staff Writer
posted: 31 March 2009
02:45 pm ET






WASHINGTON — Astrium Services of Europe, which is branching out from its core military satellite communications services business to Earth observation and navigation, became a billion-dollar company in 2008 with a 43 percent increase in revenue compared to 2007.

Astrium
Services Chief Executive Eric Beranger said the company expects at least 10 percent revenue in 2009. The decline is mainly due to the fact that the company’s core contract, to provide beyond-line-of-sight communications to the British Ministry of Defence and to NATO, reached its average annual revenue rate in 2008 with the completion of launches of the three-satellite Skynet 5 military telecommunications satellites.

Beranger
refused to give precise revenue figures for the company. But Astrium Services parent, EADS, said in its annual financial statements that Astrium Services in 2008 accounted for 19 percent of the total revenue booked by Astrium in 2008. Astrium Space Transportation and Astrium Satellites are the company’s other space divisions. Both are bigger than Astrium Services but are less profitable and growing less quickly.

A 19 percent contribution to Astrium’s total revenue in 2008 would put Astrium Services’ revenue at 814.9 million euros, or $1.11 billion.

Astrium
Services operates three Skynet 5 satellites and three Skynet 4 spacecraft for the British Defence Ministry, plus one aging NATO satellite. The company is providing part of its Skynet 5 capacity to NATO under a multiyear contract. By the number of satellites it operates and the revenue that is generated from them, Astrium Services is among the world’s top commercial satellite operators.

Malcolm Peto, chief executive for telecom services at Astrium Services UK, said the company recently has been able to squeeze additional UHF capacity from the Skynet 5 satellites, effectively resulting in the addition of two more UHF channels being made available on each of the three Skynet 5 spacecraft. Each satellite now has seven channels instead of two.

Astrium
Services recently booked a contract to provide UHF satellite capacity to the U.S. Navy, through its partner, Intelsat General of
Washington
. Peto said the three large Skynet 5 satellites currently are about 50 percent full.

Military and government telecommunications services account for about 60 percent of Astrium Services revenue, Beranger said. Earth observation and navigation-related services account for the rest, with navigation still in the start-up phase.

In 2008, Astrium Services purchased the French government’s share in Spot Image, whose optical Earth observation satellites will be added to the TerraSAR-X radar satellite operated by Infoterra, Astrium Services’ geo-information division. A TerraSAR-X twin, called TanDEM-X, is scheduled for launch late this year. Spot Image operates the Spot 2, Spot 4 and – as its main revenue generator – the Spot 5 spacecraft.

Launched in May 2002, Spot 5 is already past its contracted five-year service life but continues to operate well and has several full service years of life ahead of it, Beranger said. He said the company continues to evaluate a Spot 6 satellite to assure the Spot Image revenue stream. Spot 5 accounts for more than half of Spot Image’s 100 million euros in annual revenue.

Industry officials have cited numerous reasons why Astrium Services has not yet ordered a Spot 6 satellite despite the fact that it will take about three years to build and launch. In the meantime, Spot Image’s revenue stream will continue to be highly dependent on a single asset, Spot 5.

One reason is that the French government and some other government customers of Spot 5 have grown accustomed to paying low rates for the imagery and now face commercial rates. Another reason is that the Astrium Services purchase of Spot Image occurred just as the credit crisis was causing banks to stop lending.

A final reason is that the Spanish government is building a satellite called Ingenio that has many of the characteristics of a Spot 6.

“We naturally have an interest in discussing with Spanish authorities on whether there might be some clever way we could work together,” Beranger said.