MUNICH, Germany — Intelsat confirmed March 9 that for 2009 it retained — just barely — bragging rights over fellow Luxembourg resident SES as the world’s biggest satellite fleet operator and said it expects a U.S. Navy contract for up to $500 million in satellite broadband services will take effect in mid-2010, assuming a protest filed by several losing bidders is dismissed.
The protests allege, among other things, that Intelsat and SES, which is part of Intelsat General’s winning bid for the Commercial Broadband Satellite Program (CBSP), colluded in an anti-competitive way to wrest the contract from the other bidders. Intelsat General of Bethesda, Md., is an Intelsat subsidiary that markets services to U.S. government customers.
The losing CBSP bidders include Artel Inc. of Reston, Va.; CapRock Communications of Fairfax, Va.; and Segovia Inc. of Herndon, Va., which is now owned by mobile satellite services provider Inmarsat of London. The indefinite-delivery, indefinite-quantity contract is valued at up to $542.7 million over five years to provide the U.S. Navy with broadband links in the C-, Ku- and X-band portions of the radio spectrum.
In a conference call with investors on Intelsat’s 2009 financial performance, Intelsat Chief Executive David McGlade sought to portray the protests as a speed bump on the way to beginning work on the contract. The protest will be heard by the U.S. Government Accountability Office, with the government’s case to be made by the U.S. Defense Information Technology Contracting Organization.
Intelsat reported 2009 revenue of $2.5 billion, up 6 percent from 2008 and enough to keep it in front of SES as the biggest fixed satellite services fleet operator. SES reported 1.7 billion euros in revenue in 2009, equivalent to $2.4 billion using Dec. 31 exchange rates.
Intelsat reported that its backlog at the end of 2009 stood at $9.4 billion, up 6.8 percent compared with a year earlier. EBITDA, or earnings before interest, taxes, depreciation and amortization, was 79 percent of revenue.
Intelsat’s growth in 2009 came despite a 4 percent decline in media business in North America and was attributed largely to a big increase in business with the U.S. Defense Department and other government agencies.
The company, which in December moved its legal residence from Bermuda to Luxembourg to avoid possible future problems related to Bermuda’s status as a tax haven, said demand for its satellite transponders remained strong in Africa, the Middle East, Central and Eastern Europe and Latin America.
McGlade said that for the first half of 2010, Intelsat’s revenue stream will be slowed by the delayed CBSP contract, and by delays in the launches of two satellites, Intelsat 14 and Intelsat 15, both of which were placed into orbit in late 2009. The company said the February failure of the Intelsat 4 satellite at 72 degrees east will marginally reduce revenue in 2010 because the satellite was declared definitively out of service and its customers could not be relocated to other Intelsat satellites.
Intelsat 4, launched in 1995, was nearing retirement and generated less than $20 million in annual revenue.
As is the case with its two biggest competitors, SES and Paris-based Eutelsat, Intelsat is in the midst of a fleet expansion that includes eight satellites to be launched by late 2012. The company also spent $210 million in cash in late 2009 to purchase the in-orbit ProtoStar 1 satellite from its bankrupt owner. The satellite, now named Intelsat 25, will begin operations at 328.5 degrees east by June, Intelsat said.
Intelsat expects to purchase two additional satellites before late 2012.
Supporting the fleet replenishment is a capital-spending program that will total between $825 million and $900 million in 2010, and up to $875 million in 2011 before dropping to around $500 million in 2012.
As of Dec. 31, Intelsat’s fleet totaled 2,025 transponders available on satellites still stabilized on three axes. These satellites were 83 percent full on average, the company said.
These totals do not include transponders sold on inclined-orbit spacecraft, which have dispensed with north-south station-keeping to save fuel as they near retirement.
Inclined-orbit satellites are still capable of generating revenue, as Intelsat demonstrated with its Intelsat 601 spacecraft, which last year redirected a beam to provide the French Defense Ministry with links for unmanned aerial vehicles over Afghanistan.
Government business as a whole was the star of Intelsat’s revenue picture in 2009, increasing by some 21 percent, to $424.4 million, compared with 2008. One reason for the increase was Intelsat’s decision to relocate its aging Galaxy 26 satellite to 50.8 degrees east to provide support to U.S. Defense Department unmanned aerial vehicles in the Middle East.
Intelsat officials said that despite their planned new satellites, they expect that in 2012, the total number of commercially available transponders in orbit will show no net increase as older satellites are taken out of service.