The Top 5 Fixed Satellite Service Operators

1- SES Global:

SES Global Chairman Romain Bausch says the company’s revenues will grow by at least 10 percent in 2005 and by the same amount in 2006 based on business already on the books as backlog.

With its stock recently trading at record highs despite a relatively modest dividend yield — at least compared to the yields of SES Global’s publicly traded competitors — Bausch for the moment appears correct in his assessment that investors want a growth story, not just a regular cash payment.

Growth is what SES says it intends to offer as it seeks to help start new businesses in Mexico and Canada with partner EchoStar and others, and continues to hunt for more direct-to-home television growth in the United States.

New growth avenues in government services also are in the cards following the Luxembourg-based company’s purchase of satellite-services businesses in the United States and Europe. Bausch has warned that these new assets may carry lower pretax profit margins, but will deliver new customers to SES’s satellite fleet.

Bausch insists that his company is the only big fixed satellite services operator not constrained by private-equity owners, high debt loads or a constraining dividend obligation, and therefore might even be interested in a satellite mobile-broadband play.

2- Intelsat Ltd:

Intelsat Ltd. of Bermuda and Washington appears to have stopped the loss of its backlog, which in 2004 was stable at $4 billion, and made inroads into the North American broadcast market following the 2003 purchase of Loral’s Atlantic fleet of satellites.

Intelsat, whose fifth Atlantic satellite, IA-8, was launched June 23, is considered likely to proceed with an initial offering of stock this year, following successful introductions by competitors New Skies Satellites and PanAmSat.

Intelsat and New Skies also have asked for U.S. government approval of a possible reintegration of the two companies. New Skies is an Intelsat spinoff from the time when Intelsat was an intergovernmental organization.

IA-8 is the last new satellite Intelsat expects to launch for a couple of years, although its IA-9 spacecraft is under construction. The company reached agreement with New Skies for access to New Skies capacity to compensate for the loss of the Intelsat 804 spacecraft in early 2005.

The IA-8 satellite should be a big help as Intelsat works on expanding its North American video business. The company’s government business, meanwhile, managed by Intelsat General Corp. of Bethesda, Md., generated 19 percent of Intelsat’s total revenues in the last three months of 2004 compared to 11 percent a year earlier.

3- Eutelsat:

Will Satbirds, the holding company that owns 85 percent of Eutelsat, fly to the public equity markets in 2005? The grouping, whose members include Goldman Sachs, Spectrum Equity Partners, Texas Pacific Group, Cinven and Eutelsat’s biggest shareholder, Eurazeo of Paris , would like to turn at least part of its Eutelsat investment into cash.

The moment seems right for the move. European equity markets have recently greeted stock moves by SES Global and mobile satellite services operator Inmarsat with favor, and U.S. investors have bought into stock-market introductions by PanAmSat and New Skies Satellites.

The Satbirds group in April closed a $3.1 billion debt offering in anticipation of further Eutelsat shareholder consolidation.

Eutelsat’s expansion into Latin America via a stake in Hispasat of Spain, and eastward into Central and East Asia through partnerships, has not dramatically changed the company’s business mix. Eutelsat remains predominantly a provider of European direct-to-home television programming using its Hot Bird fleet of satellites.

It is a market that gives Eutelsat the luxury of having some 90 percent of its backlog assured for the life of its satellites.

4-PanAmSat Corp.:

PanAmSat Corp. Chief Executive Officer Joe Wright says his company is in “the best shape we’ve ever been in” and will be able to continue to pay a hefty dividend to its shareholders and keep up with the modest capital spending planned in the coming years.

The Wilton, Conn.-based company reports that continued strong U.S. demand for video programming, and U.S. government demand for commercial satellite capacity, will provide solid bases for revenue and earnings growth.

PanAmSat officials say capital spending will average less than $200 million a year for the next several years. The company has five satellites on order, including two awaiting launch by autumn, but is buying no more capacity than it needs to respond to proven market demand. Three of the satellites on order are relatively small Star-2 platforms built by Orbital Sciences Corp.

As of March 31, PanAmSat backlog stood at $4.76 billion, down slightly from a year earlier.

5- JSAT Corp.

JSAT Corp. revenues held steady in 2004 and the Tokyo-based company expects performance to be flat again in 2005 as the highly competitive Asia-Pacific market continues to cope with overcapacity and downward pressure on transponder-lease rates.

To combat the sluggishness in its core market, JSAT has formed a joint venture with Teleport Access Services of Taiwan to provide data links for Japanese and Taiwanese companies doing business in China. JSAT has acquired a seat on the board of Teleport Access Services following the purchase of a 5 percent equity stake in the Taiwanese operator.

JSAT also has a joint venture with PanAmSat that centers on the use by both companies of the Horizons-1/Galaxy 13 satellite, which provides C- and Ku-band coverage for the trans-Pacific and North American markets from 127 degrees west longitude.

JSAT had a two-day scare in January when the JCSAT-1B satellite lost attitude control and went completely out of service. Business was restored, but the timing of the incident was unfortunate. The company was negotiating its annual in-orbit satellite insurance policy. The thrusters on the JCSAT-1B, and on three similar JSAT satellites , were excluded from the renewed policy in March.