Intelsat Orders More Satellites

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Due to increased customer demand and concerns about launch disruptions, Intelsat ordered three more satellites and is accelerating its deployment of birds this year.

Intelsat, the world’s largest provider of fixed-satellite services, since the end of last year has placed orders for two additional replacement satellites and one ground-spare satellite, company officials said during a fourth-quarter conference call. Those orders are in addition to outstanding orders for five other satellites, all of which are expected to be built over a period of three years.

Intelsat also contracted for additional launch capacity so it can launch three, and possibly four, satellites this year, officials said.

As a result of its plans, Intelsat is now roughly doubling its projections for capital expenditures this year, to $615 million from the prior estimate of $380 million.

At this juncture, Intelsat has eight satellites under construction, with three to four of them slated to launch this year, starting with Galaxy 17 in May. Its launch will be followed by those of Intelsat 11, Horizons-2 and, possibly, Galaxy 18, according to Jim Frownfelter, Intelsat’s chief operating officer.

“The current launch schedule for our satellites has been shuffled due to the widely reported disruptions in the launch-service industry and, as a result, has impacted our cap-ex plan,” he said.

Intelsat had three satellite launches planned with Land Launch and Sea Launch in 2007 -- companies that have experienced launch disruptions. In January, a $300 million Dutch satellite exploded when being launched from a Sea Launch floating platform.

“That’s caused us to accelerate the build of a contingent satellite,” Frownfelter said. “It is a ground spare and is positioned as fast replacement for Intelsat 11 in event that its launch is unsuccessful.”

As a precaution, Intelsat decided to acquire additional launch capacity by procuring an Ariane 5 rocket to launch Intelsat 11 and Horizons-2 in September this year, according to Frownfelter.

Intelsat’s plans also include accelerating its replacement of satellite Intelsat 709, which will be moved to a new orbital location, by Intelsat 15 and increasing the capacity of Intelsat 14.

Intelsat -- which purchased rival PanAmSat last July -- reported fourth-quarter revenue of $543.2 million, up 84%, versus the prior-year period. Of the $248.3 million gain, PanAmSat’s former operations contributed $237.8 million.

Intelsat posted a net loss of $63.4 million for the fourth quarter, which reflects higher net-interest expense stemming from the $3.2 billion PanAmSat purchase.

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