Increased U.S. government spending on commercial satellite capacity and expected growth in that demand has put Wilton, Conn.-based PanAmSat Corp. [SPOT] on the verge of making an acquisition to pursue that business with zeal.

PanAmSat is close to finalizing the acquisition of Hughes Global Services, a unit of Hughes Electronics Corp. [GMH] that provides the U.S. government with satellite services. Joseph Wright, PanAmSat’s chairman and CEO, said the acquisition would help his company break into the government services business in a significant way.

In the past, Intelsat and other satellite operators have dominated that business but PanAmSat strategically plans to grow the revenue stream once the transaction is completed, Wright told SATELLITE NEWS in an exclusive Jan. 16 interview.

Doubts had surfaced in the past about whether enough growth potential existed to justify pursuing the U.S. government business, Wright said. “We decided this was a good market and it would be growing,” Wright explained.

The U.S. government increasingly has made it clear that it needs commercial satellite capacity to satisfy its rapidly growing need for bandwidth, Wright said.

“The U.S. government will be contracting more with the commercial satellite industry,” Wright said.

U.S. government initiatives aimed at Homeland Security and national defense are emerging growth opportunities for commercial satellites. “It is going to be an important market,” Wright said. “The U.S. government should have a strong U.S. company competing in this area.”

-Paul Dykewicz

(Kathryn Lancioni, PanAmSat, 571/261-8649)