SES Wins Auction for ProtoStar 2

by

PARIS Satellite fleet operator SES bested competitor AsiaSat in a Dec. 16 auction for the in-orbit ProtoStar 2 telecommunications satellite, agreeing to pay $185 million in cash in a deal expected to be approved Dec. 18 by the U.S. bankruptcy court handling ProtoStar’s Chapter 11 proceedings, SES and industry officials said Dec. 17.

Luxembourg-based SES, which had always been viewed as the most likely winner, faced only Hong Kong-based AsiaSat in the auction. Intelsat of Bermuda and Washington had expressed an early interest in ProtoStar 2 but ultimately did not take an active role in the auction, held at the New York offices of law firm Milbank, Tweed, Hadley & McCloy.

SES spokesman Yves Feltes declined Dec. 17 to discuss SES’s plans for ProtoStar 2, which was launched in May and is operated at 107.7 degrees east longitude, saying the company would withhold comment until the purchase had cleared bankruptcy court and U.S. regulatory approval.

One issue in the run-up to the auction was the value of the anchor-tenant contract with Indovision of Indonesia for ProtoStar 2’s S-band payload. Moving the satellite too far from its current slot would have meant losing the Indovision business with little chance of finding a replacement customer for the S-band frequency, which is little used in commercial satellite telecommunications.

SES already operates the NSS-11 satellite at 108.2 degrees east less than a degree away and will be able to move ProtoStar 2 to the SES position without undermining the Indovision business. AsiaSat would have had to move the satellite to 105.5 degrees east and may have had difficulty convincing Indovision that the move could be accomplished without undermining the Indonesian coverage.

Industry officials and documents filed with the Delaware Bankruptcy Court, where San Francisco- and Bermuda-based ProtoStar Ltd. filed for Chapter 11 reorganization in July, indicate that Indovision secured its S-band payload access on relatively favorable terms.

Among other contract terms, Indovision secured from ProtoStar the right to purchase the S-band payload two years into ProtoStar 2 operations for around $130 million. In the meantime, it agreed to pay annual lease charges that gradually climb from $18 million to around $23 million.

AsiaSat’s intention to move ProtoStar 2 to AsiaSat’s 105.5-degree slot would have required the approval of Indovision or risked losing the Indonesian business.

Protostar 2, a Boeing 601HP satellite model, carries 22 Ku-Band transponders as well as 10 S-band transponders, plus spares. It is expected to have a service life of at least 15 years.

SES made the purchase, through its SES Leasing subsidiary based on Britain’s Isle of Man, for its SES World Skies division.

SES World Skies Chief Executive Robert Bednarek said the company “already has a thriving video neighborhood in the immediate vicinity of ProtoStar 2 as well as appropriate orbital rights that allow for expansion.”

“By acquiring a healthy satellite in orbit, we are fast-tracking future revenue growth and providing our customers with incremental capacity while reinforcing our commitment to the continued development of the Asian direct-to-home market,” Bednarek said.