Drop in Government Sales Lowers Intelsat Revenue

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  Space News Business

Drop in Government Sales Lowers Intelsat Revenue

posted: 15 May 2006
01:45 pm ET


Intelsat Ltd. reported a sharp drop in satellite services revenues for the three months ending March 31, a decline company officials attributed mainly to a dip in the sales of Intelsat-provided mobile satellite services to government agencies.

Bermuda-headquartered, Washington-based Intelsat also said it now expects that regulatory approval from the U.S. government for its purchase of rival PanAmSat might not occur until the third quarter of this year.

Intelsat reported May 10 that revenues for the first three months of 2006 totaled $280.4 million, down 4.3 percent from a year ago “primarily due to reduced usage of mobile satellite services sold to government customers,” the company said in its earnings statement.

Government agencies — mainly but not exclusively in the United States — accounted for 17 percent of Intelsat revenues for the quarter, down from 22 percent a year ago.

Intelsat backlog was stable at $3.8 billion. Intelsat Chief Executive Officer David McGlade said trends overall are “indicative of good sales activity in our core business.”

The reduced government business had the positive side effect of lowering Intelsat’s cost of revenue. The company is often obliged to lease capacity on competitors’ satellites to meet its government contracts. Fewer government contracts means Intelsat needed less of its competitors’ capacity.