Intelsat Reports Increased Demand from All Regions

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  Space News Business

Intelsat Reports Increased Demand from All Regions

By PETER B. de SELDING
Space News Staff Writer
posted: 18 November 2008
02:45 pm ET






PARIS
— Satellite-fleet operator Intelsat on Nov. 13 said demand for its satellite capacity has increased in every part of the world so far in 2008, even in the long-oversupplied Asia-Pacific region, and shows no sign of softening as a result of the global economic slowdown.

Washington-based, Bermuda-headquartered Intelsat, the world’s second-largest fleet operator after SES of Luxembourg in terms of revenue, said its backlog grew again in the three months ending Sept. 30, to a record $8.7 billion. The backlog at June 30 was $8.5 billion.

Intelsat Chief Executive David McGlade said the company has been closely examining its customer base for any signs of weakening, which in Intelsat’s case could be an increase in bad-debt accounts among start-up broadcasters, downward pressure on satellite transponder-lease prices or customer decisions not to expand into new areas including high-definition television.

So far, McGlade said, there is no sign of any erosion in the business. “They seem to still be bullish,” McGlade said of Intelsat’s customers during a Nov. 13 conference call. “We think we’re crucial to our customers and we hope that when they look at their expenditures, we’re the last one they cut. Even in the terrible [global economic] situation we’re in today, we’re still performing strongly.”

For the nine months ending Sept. 30, Intelsat said demand for its satellite capacity grew by 19 percent in
Europe
, 12 percent in the
Middle East
and
Africa
, 7 percent in
North America
, 4 percent in
Latin America
and the
Caribbean
, and 4 percent in the Asia-Pacific region.

Intelsat booked capacity renewals from two large customers during the quarter, the OPT telecommunications authority of
French Polynesia
and satellite-television broadcaster DirecTV Latin America.

OPT renewed on Intelsat’s IS-701 satellite and booked multiple transponders on the IS-18 satellite, which is under construction, for the full 15-year life of the new spacecraft. DirecTV Latin America, one of Intelsat’s largest customers, renewed its contract on Intelsat’s Galaxy 3C satellite in a deal that commits the company to Intelsat until 2020, McGlade said.

For the three months ending Sept. 30, Intelsat reported revenue of $598.5 million, a 10 percent increase over the same period a year ago. EBITDA – earnings before interest, taxes, depreciation and amortization – was 79 percent of revenue, in line with previous quarters.

Intelsat, which remains heavily indebted following changes in ownership in recent years, posted a net loss for the three-month period of $179.3 million. McGlade said the company’s debt contracts have locked in interest rates, and the next large bond payment is not due until 2012.

The company reported that it had $656.1 million in cash as of Sept. 30.

Intelsat said its satellites, when counting only those that remain fully stabilized in orbit, were 83 percent full Sept. 30, compared to 80 percent June 30. The percentage increase is partially the result of the fact that the aging Intelsat 801 was placed into an inclined orbit during the quarter.

A satellite in inclined orbit continues to function but is too low on fuel to remain stable on its north-south axis and thus has a more limited revenue-generating capability.

The higher fill rate is one reason why Intelsat, which is gradually reducing the number of satellites it has in orbit, will not sell spacecraft to competing operators, McGlade said.

McGlade
said Intelsat, which has five satellites on order to replace aging spacecraft in orbit, expects capital spending in 2008 to be between $480 million and $500 million, up slightly from Intelsat’s previous estimates.

Intelsat ordered two satellites during the three months ending Sept. 30. Orbital Sciences Corp. of
Dulles
,
Va.
, will build the Intelsat 17 satellite to replace the IS-704 spacecraft at 66 degrees east. Space Systems/Loral will build the Intelsat 18 satellite to replace IS-701 at 180 degrees east.