[Satellite TODAY Insider 11-02-10] The unexpected loss of Eutelsat’s W3B satellite on Oct. 29 due to a satellite propulsion subsystem anomaly provoked gloomy reactions from European investment bank satellite analysts.
    Natixis Securities Satellite Equity Analyst Eric Beaudet said the loss would seriously diminish the operator’s position in the market. “The growth profile for the group will be affected. The [16 degrees East] position is almost full today and Eutelsat will therefore not be able to grow that position until W3C arrives in the second half of 2011. Secondly, the two satellites set to be replaced by W3B were supposed to offer more capacity on new orbital slots, which they will now not be able to do.”
      The satellite, built by Thales Alenia Space, was scheduled to be co-positioned with Eutelsat’s W3A satellite at 7 degrees East to increase Ku-band coverage over Europe, North Africa and the Middle East as well as sub-Saharan African and the Indian Ocean islands by 50 percent. Eutelsat’s three satellites at that location now will remain in full service until the arrival of W3C, which is scheduled to launch in mid-2011. To compensate for the W3B loss, Eutelsat said it would initiate a new program, called W3D, for a planned launch in the first quarter of 2013.
    As a consequence of the loss, Beaudet believes analysts will have to downgrade the operator’s potential to generate profits. “This is, of course, bad news for Eutelsat. Even if they keep their guidance unchanged, we believe consensus and Natixis will have to revise slightly downward its growth expectations in the short term (2011), and medium term, as it was already bullish with 8.1 percent CAGR expected through 2013.”
    In a report released shortly after the anomaly was announced, Jefferies International Analyst Nick Bell discussed how the loss of the satellite could impact Avanti Communications. “We expect the event to bring launch risk to the front of investors’ minds but note Avanti’s share price has not strongly reacted to the news implying much of this risk is already priced in. We reiterate our Buy rating as a direct read across to Avanti is limited and, as per our conversations with insurers, satellite failures are very rare.”
    However, Bell is confident that Avanti will not experience the same degree of problems that Eutelsat will have to deal with. He also noted that W3B’s launcher, Arianespace, was not responsible for the satellite’s loss. “The Ariane 5 rocket successfully transported the payload into orbit, the telemetry issue arose after the satellite detached from the rocket when the motor failed and telemetry control was lost. The same issue is unlikely to arise for Avanti as different component manufacturers are used. Being its first satellite to launch, Avanti has taken precautions to guard against such failures. There are multiple propulsion motors on Hylas-1 significantly decreasing the chances of a similar problem occurring.”

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