Intelsat outbids Eutelsat for satellite
Intelsat, already the world’s largest commercial satellite operator, has paid $210m for a satellite that’s already orbiting. Intelsat bought ProtoStar-1 at a New York auction on Oct 29, outbidding Eutelsat, SES and a surprising number of others. Indeed, the price paid was significantly higher than most observers had expected.
ProtoStar-1’s parent company is bankrupt and is selling both of its in-orbit satellites to raise cash to pay creditors. Most industry observers had anticipated bids of between $125m and $150m in the auction. Other bidders who dropped out in the process included SES, Measat, Echostar and Thaicom, amongst others.
Intelsat, once the legal formalities have wrapped, will shift the satellite from its current Pacific Ocean location to the Atlantic, probably 31.5 deg West and thus boost its coverage of Africa. The satellite is currently at 98.5 deg East.
ProtoStar-1 is a healthy satellite that was launched in July 2008, and has an estimated 15 years of useful life left. ProtoStar-1 was built by Space Systems/Loral under an order originally from the Chinese (as ChinaSat-8). This order was cancelled, and the craft modified and launched in July 2008 to 98.5 deg East. ProtoStar 2 was built by Boeing and launched in May 16 this year.
The industry anticipated a more modest price because of the age of the satellite. The original order was put in in the late 1990s, ready for launch in 1999, but the Chinese operators failed to get an export licence from the US authorities. Loral announced in Feb 2005 that it had reached a settlement with ChinaSat, and that permitted a new buyer to emerge – ProtoStar.
However, while a full overhaul was made of the satellite, and its storage was fully protected, it was thought inevitable that some concerns over the suitability of the satellite to perform a full 15-year operational life would damage the sale process.
Not so. The auction price has now raised the bar as far as the sale of ProtoStar-2 is concerned. Its auction will take place in December. ProtoStar-2 is already earning some cash from its 107.7 deg East slot where there is an ‘anchor’ tenant. ProtoStar 2 was built by Boeing and launched in May 16 this year.
ProtoStar was financed by Venture Capital cash. It has been operating under Debtor in Possession funding of $16m in order to finance the sale of the two satellites. It applied for Chapter 11 bankruptcy protection in July. Its situation was precipitated when in March it emerged that Agrani Satellite Services cancelled a capacity contract. Agrani is part of the ESSEL Group of companies, connected with Zee TV. Other frequency coordination issues also stymied ProtoStar’s operational plans.
SES remains a favourite to win control of ProtoStar-2 given that it has rights to certain key transmission frequencies adjacent to 107.7 deg East.