Telenor Satellite Broadcasting is so optimistic about business prospects in the Nordic region and in Central and Eastern Europe that it has begun preliminary design of a Thor 7 satellite even though it has just taken delivery of the Thor 5 spacecraft and is awaiting a mid-2009 launch of
Thor 6
, company Chief Executive Cato Halsaa said.


In a June 3 presentation on the Oslo, Norway-based company’s business prospects, Halsaa also said Telenor is in final negotiations to lease its aging Thor 2 satellite to an unnamed satellite-fleet operator for the rest of the satellite’s life. Thor 2 will continue to be operated by Telenor, but at
a new orbital slot, he said.


Thor 2 was launched in 1997. With the Thor 5 satellite now operating in orbit at Telenor’s 1 degree west longitude slot and Thor 2 customers safely transferred to the new satellite, Telenor has no immediate need for Thor 2.


Halsaa said Thor 2, a spin-stabilized, Boeing 376-model design, has enough fuel to last until the end of the year under normal operations. But he said the new user likely will opt to place Thor 2 into an inclined orbit, which conserves fuel and could extend operations for several more years.


Meanwhile, Telenor Satellite Broadcasting reported revenue
of 761 million Norwegian kroner ($149.3
million) in 2007, a 6.7 percent increase over 2006. The company declined to provide forecasts for 2008 but Halsaa said a further increase is expected since the larger, more-powerful Thor 5 will contribute revenue
for most of the year.


Thor 5, built by Orbital Sciences Corp. of Dulles, Va., was launched in February and carries 24 Ku-band transponders. Thor 6, under construction by Thales Alenia Space of France and Italy, is scheduled for launch in mid-2009 and will replace the Thor 3 satellite at 1 degree west. Thor 6 is being equipped
with 36 Ku-band transponders.


Telenor has budgeted about 2.5 billion kroner for the Thor 5 and Thor 6 satellites combined, or more than three times its annual revenue
– a sizable investment for the company and one that reaffirms its commitment to remaining a force in Nordic direct-broadcast television services, Halsaa said. Once Thor 6 is in operation, Telenor will have doubled its capacity at the 1 degree west slot.


Telenor Satellite Broadcasting competes directly with SES Sirius of Sweden, owned by satellite-fleet operator SES of Luxembourg. But Halsaa said the main competition is between the Norwegian and Swedish
television broadcasters
and not between fleet operators Telenor and SES Sirius.


Telenor Satellite Broadcasting’s current revenue
comes 72 percent from the Nordic region, mainly through Canal Digital, a television broadcaster owned by Telenor ASA of Oslo. The remaining 28 percent of the satellite operator’s revenue comes
from Central and Eastern Europe.


The continued strength of these nations’ domestic satellite-television markets has caused Telenor to begin looking at a possible Thor 7. Halsaa said no decision has been made yet to purchase a new satellite
, however.


“The transponder pricing environment is improving for us,” he said. “And what is clear now is that central and east Europe are no longer a dumping ground for excess capacity that cannot find a market elsewhere.”


Halsaa said Telenor, which co-owns the Intelsat 10-02 satellite at 1 degree west with satellite-fleet operator Intelsat of Bermuda and Washington, likely will involve Intelsat in any plans for a Thor 7 because of Intelsat’s longstanding frequency rights at that orbital slot.


In June 3-4 presentations to investors in London and New York, SES officials confirmed that they
see continued promise in Central and Eastern Europe. SES officials said that while 30 percent of homes in Western Europe receive satellite television either directly or via cable links to satellite downlink stations
, only 19 percent of central European homes and 9 percent of eastern European households
currently are subscribing to a satellite service. These figures do not include the Russian market. SES recently inaugurated a new orbital slot
at 31.5 degrees east longitude
to serve
the eastern European market. Its SES Sirius AB subsidiary also aims at the central and eastern European markets using a satellite located at
5 degrees east longitude


SES officials say their company’s size and global reach permit it to purchase satellites, launch vehicles and insurance at less cost because it
can order in bulk and because suppliers occasionally make concessions to SES in hopes of winning future business.


In the most recent example, SES said its contract with Orbital Sciences Corp. for up to five satellites, a contract the Dulles, Va., manufacturer
valued at about $400 million if all five satellites are purchased, represents a 20 percent discount over what SES
would have paid if it purchased the satellites one at a time.


Halsaa did not address the SES purchase directly, but
said Telenor has seen no evidence that larger satellite-fleet operators are able to win concessions from suppliers that are out of the reach of a relatively small player like Telenor.