SES To Cover North America From Fewer Orbital Slots

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BRUSSELS, Belgium — Satellite fleet operator SES on Oct. 27 said its business in emerging markets is growing as fast as hoped but the mediocre long-term prospects in North America will lead to shutting down a few occupied orbital positions in the coming years.

Luxembourg-based SES, which has 11 fully owned satellites under construction and is leasing capacity on a spacecraft being built for another operator, reiterated its forecast of 5 percent average annual revenue growth between 2010 and 2012.

Satellite television expansion in Latin America, Asia and parts of Africa, coupled with continued take-up of high-definition television in the developed markets, will more than offset sagging demand in some North American markets and the switch by German television broadcasters from bandwidth-hungry analog to more-efficient digital television broadcasts.

In a conference call with investors, SES said it has acquired a 70 percent voting stake in satellite operator Ciel of Canada, taking advantage of a change in Canadian regulations that lifts restrictions on foreign ownership of domestic satellite companies. SES has had a 70 percent ownership stake in Ciel since that company’s creation. The change means Ciel will now be consolidated on SES’s financial statements.

SES Chief Executive Romain Bausch said O3B Networks, a startup satellite operator planning to wholesale Ka-band links to telecommunications operators in the world’s equatorial regions, is taking longer than expected to raise $1.1 billion in equity and debt for its system.

“We’re close … but we’re not there yet,” Bausch said of O3B, in which SES ultimately will have a 30 percent ownership stake. O3B, based in Britain’s Channel Islands, plans a constellation of 20 satellites in an unusual equatorial, medium-Earth orbit.

Bausch urged investors not to read much into the delay. He said he remains confident that O3B will secure its financing before the end of the year.

As it attempts to squeeze maximum use from its current fleet of some 40 satellites, SES will be retiring a couple of slots over North America, transferring customers on these satellites to nearby spacecraft.

The decision will not mean an immediate orbital slot vacancy, however. As it is doing with its 79 degrees west position, occupied by the AMC-5 satellite, the company will let existing satellites remain there, but in inclined orbit position, until they are ready to be moved to a graveyard orbit.

Inclined orbit satellites no longer are stabilized on their north-south axes, thereby saving on fuel use. While governments and other customers are finding increased use for these spacecraft, they are not suitable for direct-to-home television.

AMC-5 customers are being switched to the AMC-2 spacecraft, which was moved from 101 degrees west to the 79 degree slot earlier this year.

SES’s QuetzSat-1 satellite, being built for EchoStar of Littleton, Colo., will be launched into a Mexican orbital slot in mid-2011 to take advantage of what all satellite operators say is strong demand in Latin America. SES moved the aging AMC-4 satellite into position at 67 degrees west on behalf of the Andean nations, whose regulatory rights to the slot were about to expire if no satellite were placed there.

SES officials expect that these nations ultimately will order a new satellite for that orbital position. What role SES would play in that case is not clear.

Bausch said the NSS-12 and Astra 3B satellites launched this year are filling up at least as fast as expected. Despite adding satellites, SES reported that its fleet fill rate increased to 78.7 percent as of Sept. 30, compared with 77.6 percent six months earlier.

The company’s Astra fleet over Europe was 89.9 percent full. SES World Skies’ North American satellites also increased their utilization rate, to 74.2 percent compared with 73.1 percent six months earlier. SES World Skies’ international fleet was 75.5 percent full, down from 76.3 percent as of March 31. Bausch said the company would like to move toward a 90 percent fill rate over time.

For the nine months ending Sept. 30, SES reported revenue of 1.28 billion euros ($1.74 billion at Sept. 30), up 4.7 percent from a year earlier. Its EBITDA — earnings before interest, taxes, depreciation and amortization — was 76.2 percent of revenue. Its core satellite bandwidth sales business reported an EBITDA of 83.4 percent.