SES Astra Is Busy With Deals

SES Astra has had a busy month. It has concluded a deal with the BBC for two additional transponders on the ASTRA 2D satellite at 28.2 degrees East and has awarded a contract to Lockheed Martin Commercial Space Systems (LMCSS) for two satellites.

The deal with Lockheed Martin [NYSE: LMT] is for two satellites – the ASTRA 1KR and the ASTRA 1L. The ASTRA 1KR will have 32 active Ku-band transponders and will replace the ASTRA 1B and 1C launched in 1991 and 1993, respectively. If the launch of ASTRA 1KR is a success, the second satellite would then be called ASTRA 1L and would replace the ASTRA 1E. It features 29 active Ku-band transponders as well as 2 Ka-band transponders for interactive applications. If the ASTRA 1KR suffers a launch failure, the ASTRA 1L would be the replacement satellite and would be renamed the ASTRA 1KRR. The two satellites are expected to be launched in the second half of 2005 and in 2006, respectively.

Ferdinand Kayser, the president and CEO of SES Astra, told Interspace that there were no other potential satellite deals in the pipeline. “The main objective of these satellites is to procure the replacement capacity we need. These two procurements for satellites are the only two we are working on for the time being. There is nothing else in the pipeline.”

The deal with SES Astra is also a significant boost for LMCSS, but despite the fact this contract has been signed, Kayser is unsure whether this will act as a boost for the satellite manufacturing industry as a whole. “I don’t know whether these orders will give a boost to the industry because with our two satellites, there might be in total this year of around four to six satellites procured. I really would not preclude consolidation happening in the satellite manufacturing industry.”

Spain

While the deals are good news for SES Astra, a number of challenges still remain. In particular, the Spanish situation remains a key potential battleground for the company. The merger of the two satellite TV platforms, Canal Satelite Digital (CSD) and Via Digital, is all but complete. Via Digital uses a Hispasat’s satellite to deliver programming, while CSD uses an Astra satellite. Sogecable, the owner of the merged platform, has indicated it wants to keep using both satellites for the time being, although it seems likely at some point that it will choose between SES Astra and Hispasat for satellite capacity.

Jacinto Garcia Palacios, the CEO of Hispasat, told Interspace (see issue 766), “We are convinced that technically speaking, we are in a better position. Why? Because our satellites have been designed for this territory. That means the power of our signal is higher in all the extended areas of the country, including the Azores Islands, as well as Portugal, the Spanish provinces of North Africa. So, this is not the case for our competitor and their satellites.”

Despite Hispasat’s claims, Kayser believes SES Astra will be in the Spanish market long-term. “What I would suggest is that you ask Sogecable, because at the end of the day it is their decision, not Hispasat’s. We would obviously not be pleased if Sogecable solely chose Hispasat ultimately. But, we do not have any reason to think about this scenario. We expect to be in the Spanish market long-term. We have invested in the Spanish market and we have a very good relationship with our customer. It is Sogecable, and not Via Digital, that is in the driver’s seat and Sogecable has the higher number of subscribers.”

Kayser was not wholly surprised that Sogecable decided to remain on both platforms for the time being. “My understanding is that the management of Sogecable is acting in the interests of the company. They are going through a merger, and I know from experience, that on the operational side of things, that is not easy. So, it is not a surprise if you look at it in that sense.”

While the situation in Spain has yet to resolve itself, the situation in Europe among the pay-TV operators is becoming clearer. With consolidation happening in Spain and Italy, most major European countries now have one satellite pay-TV operator. Kayser believes this model makes sense and expects consolidation will happen in the French market as well, where currently there are two pay-TV operators, Canal Satelite and TPS. He commented: “What is true is that the business model of the digital pay-TV operators has led to a situation that in each major market, at the end of the day, there will only be one digital pay-TV operator. Consolidation has taken place in Poland, Spain and Italy. It may also take place in France, but it may take a couple of years. France will be the last market but it will come.”

Eastern Europe

With markets in Western Europe maturing, SES Astra will look more to markets to Eastern Europe to boost its broadcasting revenues. Kayser said that this represents a key opportunity for the company. “We see there being two Eastern European belts – the first one being Hungary, the Czech Republic, Slovakia, Poland, and the second being more East. These countries will also have digital service, but they will need more time. We want to be there when it happens. We will have to look for creative pricing models because the economies cannot be compared with those in Western Europe. But, we believe in these markets. We believe in the growth. That is the reason why we have entered into these markets.”

–Mark Holmes

(Contact: Yves Feltes, SES ASTRA, e-mail: [email protected])