What was supposed to be a banner start to 2007 has turned into somewhat of a challenge for SES New Skies CEO Rob Bednarek.

The company’s NSS-8 satellite was destroyed by the January failure of a Sea Launch rocket, and Bednarek must formulate to make sure the loss of the NSS-8 capacity does not disrupt SES New Skies’ revenue flow.

Bednarek still sees growth potential for SES New Skies and remains confident that the future is bright now that the company’s integration into SES Global is all but complete.

"We are essentially done," Bednarek said. "What we laid out at the beginning of the integration process, which started essentially prior to closing and about this time last year, [was] a process by which we decided that New Skies would continue as a market facing entity, present the capacity that provides the connectivity between regions, and connectivity and distribution within regions outside of Europe and America. We would present that to the market as a third element of SES’s group. We have [SES] Astra providing capacity to the European marketplace. We have [SES] Americom providing capacity to the North American marketplace.

"In order to take advantage of the SES group, some of the technical operations, the flight control of the New Skies fleet has been integrated in terms of the satellite control services," Bednarek said. "Astra provides those services now to New Skies. In the area of payload monitoring or transponder monitoring, that is something that Americom is in the process of supplying to us. The integration has been completed. Satellite control is in Astra’s hands. Payload control is underway being transferred to Americom. The sales, marketing, and servicing entity remains here at New Skies. We are essentially in our final configuration for 2007."

Government

The challenge now will be to bring profits and growth to SES New Skies. One area which the operator will be targeting is the military and civil government market.

"All elements of government — the military, the civil side of government — are all developing applications that require more and more connectivity," Bednarek said. "Because they are developing these applications, their need — just like in the commercial world — is growing for connectivity services. Some of those services can be done terrestrially. But, a lot of those services do require satellite capacity. I just don’t see it being economically prudent for governments to rely exclusively on owned and operated hardware if you will."

Despite the NSS-8 setback, Bednarek believes the operator is well-placed to pick up a strong share of this business. "We have the right type of capacity to interlink regions, to provide in-region support to networks that might be built on behalf of either military or civil government applications," he said. "I think we are well-positioned. Our principal job is to find the additional capacity that these networks will need."

DTH

While the government sector is one where the operator is hoping for a strong performance, there are other market segments where Bednarek envisages strong prospects, such as the direct-to-home (DTH) market.

"I do think the regional DTH activity is going to be quite strong. You will see a lot of activity there," Bednarek said. "As people continue to build out networks, be it enterprise networks or ISP connectivity, it is going to be strong. Broadband is becoming more and more important as an economic engine. It is part of many peoples’ fundamental business strategy and business needs. While fiber does connect a lot of areas around the world, as broadband becomes more integrated into economic life, connectivity becomes more important and satellite has a role to play there."

SES New Skies also will target smaller bouquets and regional platforms, where Bednarek sees "real growth. DTH technology is now quite affordable in terms of the origination equipment, the transmission equipment, the satellite capacity, the consumer equipment. It is a fairly straightforward proposition to start a 50-to-60 channel DTH platform," he said. "I think given the accessibility of the technology, if you have the other ingredients — which is programming and a consumer distribution channel — you can be in the DTH business in a regional, or even sub-regional basis. There are lots of regions of the world, which would be suitable for multi-channel programming, where it does not exist cable or over the air now."

With potentially vibrant DTH markets in Asia and stronger demand for capacity, regional consolidation could be on the agenda.

"I think we will see some additional consolidation in the industry," Bednarek said. "It has been long predicted in Asia. There are lots of constraints in Asia. It may still take some time but I think the real challenge for us as an industry, is to have the right capacity in the right place in order to help these new market segments grow. I think you will see a lot of activity in Asia, Africa, Central Asia and Latin America over the next few years."

NSS-5 and NSS-806 Issues

While deriving strong revenues from such markets will be key, making sure that capacity is in place will be crucial. Adding capacity on the NSS-806 and NSS-5 satellites could be critical. The Lockheed Martin 7000 series satellites have some reliability questions hanging over them. Intelsat announced in January 2005 the loss of the IS-804 satellite, which is based on the same platform. Despite the checkered history, Bednarek said he is unconcerned.

"Nothing has changed regarding those two satellites, and Lockheed has advised up and down the whole industry that the probability of failures is quite low,," Bednarek said. "They have done thorough investigations of past failures. Nothing has changed with respect to those satellites. There is no correlation between their probability of failure and their loading at any given time. Having them full or having them empty does not in any way change the failure probability of those satellites based on the data we have seen."

— Mark Holmes

Contact: Yves Feltes, SES Global,

e-mail: [email protected]