SES Selects Astrium To Build Four Direct Broadcast Satellites

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PARIS — Satellite fleet operator SES has selected Astrium Satellites to build four direct broadcast television spacecraft in a contract valued at around 500 million euros ($743 million) and expected to be signed the week of Nov. 30, industry officials said.

It will be the biggest satellite order ever made by Luxembourg-based SES, which is also negotiating with Astrium on the sale of SES’s ND SatCom unit, a satellite ground-hardware supplier whose recent financial performance has been disappointing.

One industry official said the satellite order and the ND SatCom negotiations are not related, and that the satellite deal does not depend on Astrium’s purchase of Friedrichshafen, Germany-based ND SatCom, which is the biggest company inside what SES calls its services division.

ND SatCom’s biggest current contract, for ground systems for the German Defense Ministry’s two-satellite SatcomBw program, has suffered repeated delays and unanticipated costs as the company and its customer discuss alleged performance shortfalls.

SES replaced ND SatCom management in late 2008 and this year hired Norbert Holzle as chief executive to return the multiyear SatcomBw contract to profitable status. Holzle, a former NATO officer with the German air force, has said the contract is back on track and that trials of the ND SatCom hardware are underway and expected to continue into 2010. “We are now delivering on all contract milestones,” Holzle said at a Nov. 3 press briefing in London.

ND SatCom reported about 100 million euros in revenue in 2008. The company’s 2009 third-quarter revenue fell short of expectations, which industry officials attributed to the broader economic slowdown as well as the SatcomBw issues. This performance was the principal cause for SES’s sharply reduced revenue target for the year.

ND SatCom and Astrium Services, a sister company of Astrium Satellites, together comprise MilSat Services, the company providing the two SatcomBw satellites, the ground segment, and maintenance and operations for a minimum of 10 years. Astrium owns 75 percent of MilSat Services, with ND SatCom holding the remaining 25 percent. The first SatcomBw satellite was launched Oct. 1 and the second is scheduled for launch in early 2010.

About 60 percent of ND SatCom’s revenue is from military and other government contracts, with 40 percent coming from media organizations that use the company’s satellite communications gear. The company has a U.S. subsidiary that handles work with the U.S. government.

The four new satellites to be ordered from Astrium Satellites, meanwhile, will replace part of the direct broadcast fleet operated by SES’s Astra division, which has long been the company’s most profitable. SES officials in September narrowed the contractor selection to two finalists, Astrium Satellites and ThalesAlenia Space of France and Italy.

The satellites will be delivered at six-month intervals starting in 2012, a production timetable that SES had said would permit the winning contractor to operate with maximum efficiency and correspondingly low cost. Three of the satellites will replace Astra spacecraft at 28.2 degrees east longitude, which serve television viewers in Britain and Ireland. A fourth will add capacity at SES’s 31.5 degrees east slot for broadcasts to Central and Eastern Europe.

Astrium was viewed as the favorite in the competition because it built the Astra 2B satellite, one of the three Astra spacecraft now located at 28.2 degrees east. Astrium also built the Astra 1M satellite, located at SES’s other core orbital slot, 19.2 degrees east, and is scheduled to deliver the Astra 3B satellite in early 2010. Astra 3B will operate at SES World Skies’ 23.5 degrees east slot.

ThalesAlenia Space has built two satellites for SES, one of which was lost due to a rocket malfunction. The other, the Astra 5A, was launched in 1997 and was originally ordered by Nordic Satellite Co. of Sweden. SES later purchased a 90 percent stake in the company and renamed it SES Sirius.

But the competition between the two manufacturers was close enough that SES was unable to make its planned October contract-award date.

Once signed, the four-satellite contract will account for more than 15 percent of commercial satellite sales worldwide this year, both in terms of the number of spacecraft and total monetary value.

SES spokesman Yves Feltes declined to comment Nov. 27 on the ND SatCom negotiations and the status of the satellite contract.