Eutelsat Raises Profit Projections, Plans New Satellites

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  Space News Business

Eutelsat Raises Profit Projections, Plans New Satellites

By PETER B. de SELDING
Space News Staff Writer
posted: 20 February 2006
11:20 am ET


Satellite-fleet operator Eutelsat Communications raised its revenue forecasts through 2009 and said it would increase spending on new satellites this year to seize a specific — and undisclosed — growth opportunity.

Paris-based Eutelsat now expects to increase revenue for the year ending June 30, 2006, by 2.5 percent, compared to a 2-percent increase previously forecast. Average annual growth between 2007 and 2009 will be 4.5 percent, compared to earlier forecasts of 4 percent.

The growth starting in 2007 will be due in part to an acceleration of the planned purchase of a new Hot Bird direct-broadcast television satellite. Hot Bird 9 will be ordered this year, and not after 2009 as originally scheduled.

Eutelsat already has ordered one satellite this year and had planned to add two more orders in 2006. Those plans — for the W2A satellite, which may include an S-band payload for mobile video, and the W7 satellite — remain in place, although the contract for one of them may slip into 2007.

Eutelsat Chief Executive Officer Giuliano Berretta said Feb. 17 that once the two satellites set for launch this year are in orbit, Eutelsat will move its Hot Bird 3 satellite to an undisclosed location to address a market that Eutelsat has only recently discovered. Generating revenues from this location, Hot Bird 3 will be responsible for the upward revision in sales Eutelsat is predicting between 2007 and 2009.

In a press briefing here, Berretta said the plan is contingent on the successful launches of Hot Bird 7A, scheduled for Feb. 21 aboard a European Ariane 5 rocket; and Hot Bird 8, scheduled for launch in May by an International Launch Services Proton M rocket.

Berretta said in an interview that the Hot Bird 3 satellite will be placed at a Eutelsat orbital slot, and will continue to be owned and operated by the company. He declined to provide further details.

Moving up Hot Bird 9 production will add only 80 million euros ($95 million) to Eutelsat’s net capital expenditures, Berretta said. He said Eutelsat has found savings in its other capital expenditures, including satellites.

Berretta declined to quote prices, but he has said in the past that the contract for the W2M satellite ordered from EADS Astrium of Europe and the Indian Space Research Organis ation — a first for that joint venture — includes exceptionally good terms for Eutelsat.

Once the two satellites to be launched this year are operational, Eutelsat plans to lease its Hot Bird 4 satellite to Nilesat of Egypt. The satellite will be moved to Nilesat’s orbital slot at 7 degrees west longitude, to be co-located with Nilesat’s two existing satellites.

Eutelsat, which sells capacity from 22 in-orbit satellites, is the world’s third-largest commercial satellite-fleet operator in terms of revenues.

For the six months ending Dec. 31, the company reported revenues of 377.5 million euros, a 2.6-percent increase compared to the same period a year ago. Added to this revenue total is a one-time, 17.4-million-euro payment Eutelsat received because of outages in the Atlantic Bird 1 telecommunications satellite, which Eutelsat had leased from ALS S.p.A. of Italy.

Atlantic Bird 1 has suffered signal outages repeatedly since it was launched in 2002. As a result, Eutelsat withheld some lease payments, prompting ALS to threaten legal action. In December, Eutelsat agreed to pay ALS 48 million euros in cash for Atlantic Bird 1.

Eutelsat Chief Financial Officer Claude Ehlinger said that by making the cash purchase, Eutelsat has avoided a total of 96 million euros in rental payments that would have been due to ALS through the 2013-2014 time period.

In recent months Alcatel Alenia Space, the prime contractor on Atlantic Bird 1, has designed a software program that, when regularly uploaded onto the satellite, eliminates the outages. Berretta said the satellite now is fully operational.

Like other commercial fixed satellite services fleet operators, Eutelsat is counting on the arrival of bandwidth-hungry high-definition television (HDTV) programming to generate future growth. Even with the latest digital compression techniques, industry officials estimate that an HDTV channel will need double the amount of satellite capacity as that taken by a digital channel today.

But the arrival of HDTV depends on the arrival on the market of next-generation compression hardware, called MPEG-4. Eutelsat Deputy Chief Executive Jean-Paul Brillaud said Eutelsat “is a little disappointed by the low availability” of MPEG-4 gear. As a result, the company is assuming no major HDTV takeoff in Europe this year.

Brillaud also said Eutelsat has found that the merger of national satellite-television broadcasters — in Italy, Poland, Spain and most recently in France — has not resulted in a drop in demand for satellite capacity.

Brillaud said that even with the consolidation in national markets, the total number of satellite television channels is increasing, and merged broadcasters think twice before asking hundreds of thousands of subscribers to repoint their rooftop antennas to a new satellite location.

Comments: pdeselding@compuserve.com