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EchoStar Pondering Further North American Investment
Satellite fleet operator EchoStar Corp. seeks market opportunity in its existing Ka-band capacity and is even weighing investment in new satellites for certain niche applications as it struggles to carve out a sustainable market in North America, EchoStar officials said.
Englewood, Colo.-based EchoStar hopes to benefit from the fact that its larger competitors in the United States — Intelsat, SES and Telesat — view North America as a low-growth market in the coming years and are focusing their attention elsewhere.
“Our difference is a focus on North America,” said Dean A. Olmstead, president of EchoStar Satellite Services, the company’s division assigned to find a market beyond satellite-television provider Dish Network for EchoStar’s satellite capacity. “There’s a difference between a growth rate and an absolute number of transponders,” Olmstead said in an Aug. 9 conference call with investors, suggesting that EchoStar might find a profitable business that SES and Intelsat would view as too small.
EchoStar officials declined to disclose the fill rate on their satellites not leased to Dish Network. In the past the company has conceded that much of its current capacity is unused — both on satellites it owns and on satellites it leases from SES.
Olmstead nonetheless sounded upbeat, saying “entrepreneurial” activity in the satellite industry seemed on the rise again, and that EchoStar “is now thinking about whether we should build new satellites at new [orbital] slots to capture this entrepreneurial activity.”
Satellite companies win stimulus funds
Colorado satellite companies WildBlue Communications and EchoStar XI have won nearly $34 million in federal stimulus money to supply satellite Internet access to rural areas.
The federal government awarded Greenwood Village-based WildBlue Communications $19.5 million to supply satellite broadband access to an estimated 110,000 people and 4,800 businesses scattered across the western half of the country. WildBlue is a subsidiary of ViaSat Inc., which is based in Carlsbad, Calif.
Douglas County-based EchoStar XI Operating LLC an off-shoot of the satellite broadcaster won nearly $14.2 million. It plans to offer satellite Internet to rural areas in the eastern half of the United States, covering an estimated 42,478 people and nearly 1,900 businesses.
The White House announced $1.8 billion worth of broadband stimulus awards Wednesday.
The satellite project funding was awarded by the U.S. Department of Agriculture’s Rural Utilities Service broadband stimulus program.
The government dedicated $7.2 billion from the federal stimulus program to expand the reach of high-speed Internet in parts of the United States considered underserved by the technology. Most of those areas are outside metropolitan areas.
The program also sought to boost Internet capacity among U.S. schools, libraries, hospitals and other community institutions.
The satellite broadband stimulus funding is limited to projects serving rural areas where no fiber-optic or cable TV broadband is offered, and mainly in areas where government-assisted wireless Internet providers such as Greenwood Village-based Open Range Communications don’t operate.
WildBlue’s plan to expand services is to offer new customers in eligible areas free hardware and installation for its broadband service, then offer monthly rates at a significant discount to its usual service.
The RUS awards Wednesday also added a competitive wrinkle for the satellite providers. The RUS awarded $58.7 million to Germantown Md.-based Hughes Network Systems for discounted satellite broadband it can offer unserved rural customers nationwide.
That creates the possibility of WildBlue and EchoStar XI facing competition from Hughes for customers wanting services discounted with stimulus funding.
Sea Launch post-bankruptcy plan wins court approval
A Delaware bankruptcy court confirmed Sea Launch’s plan to reorganize under majority Russian ownership, clearing a key hurdle on the firm’s path to emerge from bankruptcy later this year.
The milestone ruling came 13 months after Sea Launch filed for Chapter 11 bankruptcy protection in June 2009.
The plan calls for Energia Overseas Ltd., a subsidiary of the Russian aerospace giant Energia, to purchase 85 percent of the stock in Sea Launch for $140 million in cash. The unsecured creditors, or firms that acquired a stake in Sea Launch in exchange for owed debts, will collectively hold 15 percent ownership in the reorganized launch business.
The previous Sea Launch ownership coalition was led by Boeing Co. with a 40 percent share. Energia, Aker of Norway, and Yuzhnoye and Yuzhmash of Ukraine held smaller shares.
The California-based firm’s Land Launch subsidiary conducted four Zenit flights since 2008 from the Baikonur Cosmodrome in Kazakhstan.
While the company’s reorganization plan has been stuck in litigation, Sea Launch has bulked up its launch backlog with new contracts for commercial satellite missions.
Earlier this month, Sea Launch announced a firm contract for delivery of an AsiaSat communications satellite to orbit between 2012 and 2014.
Last week, the launch provider signed an agreement with EchoStar Satellite Services to loft up to three spacecraft for the U.S.-based operator.
Sea Launch’s backlog now includes four firm contracts, including the AsiaSat deal, an Intelsat satellite launch, and agreements for two flights with Eutelsat payloads. The manifest doesn’t include unannounced contracts or the conditional EchoStar agreement.
Energia Overseas also committed $200 million in working capital to facilitate hardware purchases from suppliers in the United States, Russia and Ukraine.
Boeing Co. builds the payload fairing for Sea Launch’s Zenit 3SL rocket, Energia provides the Block DM upper stage, while Yuzhnoye and Yuzhmash of Ukraine are in charge of manufacturing the Zenit’s first and second stages.