Cleansed of Debt, Satmex Beginning To Rebuild Core Business
PARIS — Satellite fleet operator Satmex of Mexico, which exited bankruptcy in May with a $325 million loan, on Nov. 17 reported a slight decline in core satellite-lease revenue for the nine months ending Sept. 30.
The company said its Satmex 5 satellite, whose electric propulsion defect has forced it to survive on its backup chemical propulsion, is now estimated to be able to continue service until December 2012 — time enough to secure a smooth transition with the company’s new Satmex 8 satellite.
Satmex 8, under construction by launch set aboard an International Launch Services Proton rocket in August.of Palo Alto, Calif., is scheduled for delivery in July with a
With Satmex 5 nearing the end of its days, the launch of Satmex 8 cannot come soon enough for Satmex as the company can ill afford to lose the Satmex 5 customers.
In a Nov. 17 conference call with investors, Satmex Chief Executive Patricio Northland said a recent Satmex 5 fuel supply estimate made by the satellite’s builder, Boeing Space and Intelligence Systems, concluded that the satellite could hang on about 10 weeks longer than previously thought.
“This is important for the roll-over to Satmex 8,” Northland said. “We will now have five months” of overlap between the time that Satmex 8 is operational in orbit and when Satmex 5 will no longer be able to support its existing customers.
“This gives us a high level of comfort that we will be able to transfer all Satmex 5 customers to Satmex 8,” Northland said, adding that Space Systems/Loral may be able to deliver Satmex 8 before its contracted deadline of July 1.
Satmex 5 is operated at 116.8 degrees west longitude. It has 24 C-band and 24 Ku-band transponders. Satmex 8 has 40 Ku-band transponders and 24 C-band transponders, meaning it offers Satmex room to grow in its core Latin American market in addition to replacing Satmex 5.
Latin America is one of the world’s hottest markets for commercial satellite operators, and several of them are planning to add capacity to meet the growing demand.
Northland said the combined fill rate for Satmex 5 and the newer — and healthier — Satmex 6 satellite is 94 percent. Satmex 6 is located at 113 degrees west longitude.
Satmex also operates the Solidaridad 2 satellite, which has been in inclined orbit to save fuel. Solidaridad 2 is used mainly by the Mexican government for mobile services in L-band that can maintain links with a satellite in inclined orbit.
In a Nov. 17 filing with the U.S. Securities and Exchange Commission (SEC), Satmex said it had proposed to de-orbit Solidaridad-2 — moving it to a higher graveyard orbit out of the geostationary arc. The Mexican government is making its own estimate of how long the satellite can be operated, the company said.
For the nine months ending Sept. 30, Satmex reported total revenue of $96.2 million, which is flat from the same period last year. Its main business, selling satellite bandwidth, reported revenue of $78.2 million, down 1.5 percent from a year ago as some customers declined to renew their leases.
The bankruptcy proceedings in the United States and Mexico cleansed Satmex of most of its debt. As part of the reorganization in May, Satmex entered into a $325 million debt agreement for which it pays 9.5 percent annual interest. The principal payment is due in May 2017.
Satmex estimates that its Satmex 8 satellite will cost a total of $317 million, a figure that includes the satellite’s construction, launch and insurance for the first year in orbit. Satmex reported it had $104 million in cash as of Sept. 30.
The company has paid Space Systems/Loral some $2.6 million to begin studies of a Satmex 7 satellite, with the contract — recently renewed with Satmex’s Alterna TV subsidiary — set to expire at the end of 2012. Satmex said in its SEC filing that it still intends to build Satmex 7, but a contract schedule was not disclosed.