Nordic Satellite AB (NSAB) last week awarded the first competitive commercial satellite contract of this year to Lockheed Martin to design and manufacture the Sirius 4 satellite.

According to NSAB, Sirius 4 will be a multi-national Ku/Ka-band satellite to be built on Lockheed Martin’s A2100AX platform and is expected to have a minimum service life of 15 years.

Sirius 4 “will be used both as a backup and over time, as a continuation for the capacity we already have on the existing satellites Sirius 2 and Sirius 3,” Jan-Olaf Alfredsson, manager for the technical department at NSAB, told Satellite News. “In addition it will offer more capacity and wider coverage toward Eastern Europe compared to the existing satellites.” Alfredsson said he anticipates Eastern Europe will be a big growth market, but declined to talk specifically about how the region will boost NSAB financially.

The news that NSAB awarded the contract comes just four months after company CEO Lennart Hallkvist indicated to Satellite News that the company was holding back on a decision about ordering the satellite amid slow demand for capacity. Rather, at that time, Hallkvist said the company would be relying on existing hardware for the next two years (SN, Sept. 27, ’04). However, Alfredsson clarified those previous comments by saying at the time NSAB was “in the middle of the negotiations with the satellite vendors and I think Mr. Hallkvist did not want to give any information [about the contract] before the contract was signed. The intention was never to deny that we were going ahead with the purchase of the new satellite.”

Sirius 4’s Multiple Missions

NSAB said the Sirius 4 satellite will have multiple missions once it is placed in its expected orbit at 5 degrees East in the second quarter of 2007. The first mission will be to provide replacement capacity for Sirius 2 and Sirius 3 in the Nordic and Baltic countries, as well as enhance coverage in Eastern Europe and Russia. This mission will be supported by the spacecraft’s 46 active Ku-band transponders in the Broadcast Satellite Services (BSS) and Fixed Satellite Services (FSS) frequency bands. The satellite also will provide one wide beam Ka-band transponder for interactive applications in the Nordic and Baltic countries.

The company added that the satellite also will provide coverage to Africa. Sirius 4 will provide a sub-Saharan beam completing existing coverage offered by SES Astra’s Astra 2B satellite as well as upcoming coverage on the Astra 4A bird. This mission will be supported by six active Ku-band transponders and an additional Ka-band transponder for interconnection between Africa and Europe.

“With Sirius 4’s African beam completing existing or planned coverage of Africa within the SES Global fleet, the spacecraft is another example of the fruitful synergies between SES Global and partner companies,” NSAB General Manager Per Norman, said in the release announcing the contract.

Lockheed Martin’s First Win In ’05

For Lockheed Martin, the contract represents not only the first competitive contract awarded to the company in 2005, but the first competitive contract awarded industry-wide. And if the last two years are an indicator, this contract should be the first in a string of contracts that will put Lockheed Martin out in front of its competitors in terms of contract awards.

According to research and consultant group Futron, of the 13 publicly announced orders for commercial geostationary (GEO) communications satellite orders in 2004, Lockheed Martin led all manufacturers with 6 orders, representing about 46 percent of the publicly announced orders. Boeing Satellite Systems finished 2004 with three announced contracts, followed by Alcatel Space with two and one each to EADS Astrium and Space Systems/Loral.

Lockheed Martin also led 2003, capturing 26 percent of the 19 publicly announced commercial GEO satellite orders that year. Astrium and Loral followed Lockheed Martin in ’03, with both companies each receiving 21 percent of the orders, Futron said.

Lockheed Martin is expecting to continue receiving orders at the same pace in 2005.

“We anticipate 12 to 15 competitive contracts to be awarded this year, industry wide,” Lockheed Martin spokeswoman Dee Valleras told Satellite News. “We are targeting winning a competitive share of them similar to last year. Last year of course, we had eight of them. We announced six of them. Two will be announced at a later date.” Once those contracts are announced, and assuming no other company has unannounced contracts, Lockheed Martin would then have gathered more than half of the contracts awarded in 2004.

Valleras said Lockheed targets winning 30-35 percent of the competitive contract awards in a given year, “but we would be pleased to achieve more than that.”

Lockheed Martin’s estimates on what to expect are in line with what Futron is predicting for the coming year.

“At a very macro level, I think 2005 is going to be very similar to 2004,” Phil McAlister, director of Futron’s space and telecommunications group told Satellite News. “We calculated 13 contracts in 2004 and going forward into 2005, its going to be 10 to 15” contracts being awarded. He said Futron is predicting an average of about 12 satellites per year through 2010.

“I think all the manufacturers were hoping and predicting it would be in the 15 to 20 range, but we just don’t see that happening for the next several years.”

McAlister cited overcapacity as the main issue keeping new orders from being made.

“We still have a lot of overcapacity in terms of satellite bandwidth on orbit.” McAlister said. “And now with a lot of this private equity investment in the satellite operators, they are taking a more careful eye toward ordering new satellites and new ventures and even replacement satellites. They’ve really got to be able to close the business case before you see new satellites.”

McAlister said that after three or four years, after the overcapacity gets absorbed and services such as high definition television become more widespread, orders for new satellites should pick up.

–Gregory Twachtman

(Eileen McGowan, Futron, 301/347-3431; Dee Valleras, Lockheed Martin, 215/497-4185; Per Norman, NSAB, +46 8 505 645 00)