Satellite-fleet operator New Skies Satellites Holdings Ltd. has increased the fill rate on its five operating satellites to 61 percent from 52 percent a year ago with no substantial reductions in its transponder-lease prices, New Skies Chief Executive Dan Goldberg said.
Presenting the Bermuda-headquartered, Netherlands-based company’s financial results Aug. 4, Goldberg said transponder prices worldwide have generally held steady in recent months. The average price for new business booked by New Skies this year stayed at around $1.2 million per year for a 36-megahertz transponder.
New Skies’ owner, the private-equity investor Blackstone Group, took the company public in May with an initial public offering on the New York Stock Exchange. New Skies has since used the stock proceeds to cut its $744 million in debt by 31 percent.
Also helping to reduce debt was a $168 million cash refund from Boeing Satellite Systems International on the NSS-8 satellite, now in construction. Boeing had missed construction milestones. To avoid a contract termination, Boeing agreed to refund the New Skies deposits and take its future NSS-8 payments in installments stretched out over years.
Goldberg said New Skies in July concluded an agreement with competitor SES Global of Luxembourg in which New Skies agrees not to place a satellite at the 125 degrees west longitude orbital slot, where it risked interfering with an SES spacecraft.
New Skies had secured international regulatory approval to place a satellite at that position. But this authorization was set to expire in December if New Skies had not taken concrete steps to use the slot. Despite the impending deadline, and despite the fact that New Skies had not demonstrated a willingness to occupy the slot, SES agreed to pay $9.5 million in cash to remove the New Skies threat.
SES Global spokesman Yves Feltes confirmed the agreement Aug. 5, but said SES would have no other comment on it.
For the six months ending June 30, New Skies reported a net loss of $12.8 million, on revenues of $117.9 million.
The company reported a net profit of $19.6 million a year earlier. The loss this year has been caused by interest payments on the substantial debt New Skies incurred as part of its purchase by Blackstone, and by a one-time payment to Blackstone that accompanied New Skies’ May stock offering.
But several of its other financial measures have improved. Earnings before interest, taxes, depreciation and amortization (EBITDA) — a commonly used financial metric for satellite operators — were $75.4 million, or 64 percent of revenues, compared to 56 percent a year ago.
Backlog was down 14.5 percent, to $555 million, as of June 30 compared to a year earlier.
Transponder-lease contracts are often signed for multiyear periods, in which case customers get a discount over one-year lease rates. Depending on its strength in a given regional market and that market’s prevailing prices, a fleet operator may decide to favor shorter- or longer-term leases.
Some types of customers, notably military and other government agencies, are unable or unwilling to take out longer-term leases, which could explain why New Skies reported revenue and satellite-occupancy growth without a corresponding effect on backlog.
Goldberg said New Skies is seeing strong government and military demand “for requirements that cover every region of the globe.”
Goldberg said in an Aug. 5 interview that one-third of New Skies’ total revenues come from military and other government services. He attributed the decline in backlog to the late 2004 cancellation of a $90 million contract with India’s Data Access, a satellite services provider.
New Skies generates 42 percent of its revenues from North America; 20 percent from Europe; 19 percent from a region including India, the Middle East and Africa; 11 percent from Latin America; and 8 percent from the Asia-Pacific.
Data transmissions are 51 percent of its business. Video transmissions, including direct-to-home television, account for 30 percent, with Internet and voice traffic accounting for 14 and 5 percent, respectively.
