[Satellite TODAY 05-06-10] Hughes Network Systems has selected Arianespace to launch its Ka-Band, high-throughput Jupiter satellite in the first half of 2012, Hughes announced May 5.
        According to documents filed with the U.S. Securities and Exchange Commission, Hughes contracted Arianespace April 30 to launch Jupiter into geostationary orbit on an Ariane 5 ECA rocket from Europe’s spaceport in French Guiana. French export credit agency Coface has issued a commitment letter to provide financing for up to 85 percent of the launch contract value, which could amount to $100 million at 8 percent interest, according to analysts.
        Hughes paid Space Systems/Loral $252 million to build Jupiter to provide throughput capacity of more than 100 gigabits per second to enhance Hughes’ Spaceway 3 satellite system. Jupiter aims to provide 10 times the throughput of Hughes’ current Spaceway 3 Ka-band spacecraft.
        “Jupiter will build upon the success of Spaceway 3, enabling us to deliver even higher speed service offerings and propel us to further strengthen our leadership in the North American market, while also augmenting our Ka-band satellite technology leadership worldwide,” Hughes CEO Pradman Kaul said in a statement.
        Separately, Hughes reported its 2010 first quarter results May 5 showing consolidated revenues increasing 1 percent to $243 million and consolidated services revenues increasing 16 percent to $188 million from the same period in 2009.
        Hughes operating income also jumped 26 percent to $10.6 million over results from the first quarter of 2009. The company said its positive results were driven by $238 million in new orders received during the quarter, an increase of 10 percent over the first quarter of 2009.
        Hughes’ consumer business division continued to lead the way for the company in the 2010 first quarter, according to Kaul, with subscriber additions of 57,000 combined with lower churn at 1.98 percent, an 18 percent increase in enterprise VSAT services and increased ARPU to $72. “We were awarded impressive orders from our international enterprise customers and our non-consumer backlog looks solid going into the second quarter. Development work on our Jupiter satellite is on track, we signed the launch contract with Arianespace, and we continue to assess interesting strategic initiatives. We are very pleased with our accomplishments and are positioned well for the rest of 2010 and beyond.”
         However, Kaul said the company’s ability to fund new projects and comply with the financial terms outlined in its debt agreements depends on its future operating performance and cash flow, which are “subject to economic conditions, the level of spending by our customers and other factors, many of which are beyond our control. Any future acquisitions, joint ventures, acquisition of a satellite or other similar transactions will likely require additional capital, and there can be no assurance that any such capital will be available to us on acceptable terms, if at all,” said Kaul.
        Raymond James analyst Chris Quilty said Hughes’ investors should be pleased with its first quarter results. Hughes “once again demonstrated the company’s ability to deliver steadily growing subscribers, service revenues, and EBITDA growth, even as the company faces sharp declines in hardware revenues. Based upon first quarter results, our 2010 hardware forecast may yet be too high, but the EBITDA contribution of this business is essentially nil. On the other hand, we may be inclined to notch up our consumer estimates yet again, if the company’s 1Q10 churn rate proves to be more than an aberration.”