[Satellite News 12-28-11] Despite economic challenges and a series of next-generation offerings still in development, the satellite industry reaped remarkable financial benefits in 2011 thanks to smart acquisition moves and increasing demand for bandwidth. Satellite News has compiled a list of the most discussed contracts of the year based on Web traffic and reader interest. We present them here in alphabetical order. 

 

European Aeronautics Defence and Space Co. (EADS) acquired independent satellite and mobile communication services provider Vizada from private-equity fund Apax France for 673 million euros ($969 million). According to analysts, the takeover, announced Aug. 1, represents one of the most significant satellite service provider shifts of the year and creates a powerful merge of multi-vertical opportunities.

   The move will be accretive for EADS, complementing the company’s expansion strategy to extend its footprint outside Europe and reduce its financial dependence on aircraft manufacturer Airbus, its largest revenue and profit generator. EADS has long desired to double the share of service revenues to 25 percent and reduce Airbus’ overall commercial sales contribution from 66 percent in 2010 to 50 percent of sales by 2020.

   EADS Spokesman Rod Stone said his company would merge Vizada with its EADS Astrium space subsidiary following regulatory approval of the transaction, and that Vizada would continue to serve nongovernmental and government customers in the aerospace, defense, land, maritime and media sector. EADS Astrium builds civil and defense satellites and provides satellite services, and is the lead contractor for building Arianespace’s Ariane space-launch vehicles.

   “Vizada is in an expanding market as marine communications shifts to broadband services,” Stone told Satellite News. “Although Vizada is based in France, most of the company’s billings are in dollars. With most of its costs in euros, EADS has been trying to reduce its exposure to the weak dollar.”

   Vizada executives released its most recent financial reports, showing the company’s 2011 full-year revenue and EBITDA projections at $95 million and $660 million, respectively.

 

EchoStar and Dish Network Chairman Charlie Ergen spent 2011 leading an aggressive acquisition campaign to merge major U.S. broadband assets together to compete with billion-dollar network investments on the horizon.

   Since January, Ergen has acquired bankrupt satellite operator and valuable spectrum asset DBSD North America, video rental chain Blockbuster, TerreStar Networks and satellite Internet provider Hughes Communications.

   EchoStar’s multi-billion acquisition spree began in February when it purchased Hughes Communications and its subsidiaries for about $2 billion. EchoStar said the acquisition created a synergy that allowed Hughes to both use EchoStar bandwidth and back out of its existing Ku-band satellite capacity leases.

   In March, Dish Network received approval from a U.S. bankruptcy court to acquire hybrid S-band service provider DBSD North America. The court’s approval followed a Dish Network announcement in February that it placed a bid for DSBD for about $1 billion. Harbinger Capital Partners and Solus Alternative Asset Management then placed bids at about $1.14 billion for the bankrupt and reorganizing S-band provider, forcing Dish to increase its bid to $1.4 billion. Dish Network will provide $325 million more to DBSD’s parent company, Ico Global Communications, and remain committed to DBSD for another $87.5 million as debtor-in-possession credit facility.

   His latest potential grab became a surefire reality June 28 when TerreStar canceled its bankruptcy auction and declared Dish Network’s $1.375 billion acquisition offer the winning bid. The deal was approved by a bankruptcy court judge in July.

   Wells Fargo Analyst Marci Ryvicker said that by acquiring TerreStar and DBSD’s wide-ranging broadband spectrum portfolio, EchoStar and Dish Network would be able to build out a massive communication service offering that could drastically alter the U.S. broadband landscape.

   “The news brings [Ergen] one step closer to acquiring the building blocks he needs to pursue a business model that is likely to create long-term value and relevance,” said Ryvicker. “Combining the Terrestar spectrum — 20MHz of the 2.0GHz band — with DBSD’s contiguous 20MHz of 2.0GHz spectrum could generate an incremental asset value of up to $5 billion.”

   TerreStar Networks has long been on EchoStar’s radar ever since the company filed for Chapter 11 bankruptcy protection in October, followed by parent company TerreStar Corp. filing with the U.S. Bankruptcy Court of New York in February. The companies sought court approval to auction its assets a few months later, saying that the auction would urge its creditors to resolve differences regarding repaying the more than $1 billion of debt amassed between the two entities.

 

The Iridium Force product line roll out was announced in September. Less than a week later, Stratos added elements Iridium Extreme and Iridium AxcessPoint to its product offering. Iridium Communications’ complete suite of Iridium AxcessPoint products and services was rolled out to customers in commercial markets in October. The suite includes the Iridium AxcessPoint Wi-Fi hotspot accessory, the free Iridium AxcessPoint Mail and Web optimization software and the Iridium AxcessPoint Connect downloadable application.

    Iridium AxcessPoint Connect is a downloadable application designed to transform any Windows-based laptop into a global Wi-Fi hotspot when connected to an Iridium Extreme or Iridium 9555 satellite phone. Iridium said it also plans to make the software for Apple iOS devices available by the end of 2011.

   Wireless networking software developer Connectify entered into a strategic partnership with Iridium that same month to offer the MSS operator’s AxcessPoint Connect offering to the mobile communications market.

   The Iridium AxcessPoint Connect software will use Connectify’s Wi-Fi sharing technology to enable satellite phone users to transform their laptop into a wireless hotspot and access the Iridium global network through their smartphones, tablets and other devices. Connectify said the software application was built on its proprietary architecture.

 

ViaSat’s push to capitalize on its Yonder in-flight broadband service in North America started in September, when the company solidified a partnership with JetBlue to install Ka-band satellite broadband connectivity on its entire 160-aircraft fleet in 2012. The operator took its next step in October, when it acquired the SkyLink airborne broadband service from Arinc and added their business jet customers to Yonder.

    In a previous interview with Satellite News, ViaSat CEO Mark Dankberg hinted at the operator’s next initiative to expand its Ka-band Yonder connectivity to a major U.S. commercial airline. “We’re taking the market way beyond what past services have offered in this market.  This year, you will see the migration from the older L-band solutions move faster than ever to the Ku- and Ka-band solutions we’re providing. We hope to continue developing this market internationally — but even more strongly in North America.”

    Through its JetBlue partner, ViaSat now will see its services adopted by one of its target airlines, as JetBlue subsidiary LiveTV signed a letter of intent March 22 with Continental Airlines to provide Ka-band airborne connectivity and Internet access provided by ViaSat. LiveTV expects to install the new video and data service, based on ViaSat’s ArcLight system, on Continental’s fleet of 200 Boeing 737 and 757 aircraft beginning in 2012.

 

In October, O3b CEO Steve Collar told Satellite News that he would like to see his upcoming fleet expanded with more satellites under construction. “O3b was never intended to be an eight-satellite network. We have a fantastically scalable system. The more satellites we add to our constellation, the more capacity we can provide to our customers worldwide, the more efficient our satellite networks become and the more value we can provide to the market. It is our ambition by the time we launch our first set of satellites, that we will have more satellites under construction ready to fulfil our customers’ needs.”

   Just one month later, O3b’s investors acknowledged that they are on the same page. On Nov. 10, the broadband operator and service provider announced it raised $137 million for the construction of four additional satellites that will aim to double capacity and boost redundancy over its targeted emerging markets. The four new satellites will aim to deliver wholesale high-speed broadband internet services from optical fiber backbones in the remote regions such as Indonesia, South America’s Amazon and Africa from the submarine cables connecting the continent’s coasts.

   The additional spacecraft will launch in 2014, joining O3b Networks’ initial fleet of eight MEO satellites scheduled to orbit in early 2013. Out of those initial eight satellites, the company said its first four would reach orbit on a Russian-built Arianespace Soyuz, with the other four satellites due to follow on a second launch a few weeks later. The company said the expansion of the fleet would increase the company’s throughput by more than 90 percent through a combination of the additional beams deployed and the enhanced link efficiency of a larger constellation of satellites.

   New equity funds were raised from some of O3b’s original investors, including Google, which were joined by Luxembourg-based investment company Luxempart. The financing also included the expansion of French export credit agency Coface-backed senior debt facility of an additional $85 million provided by HSBC, ING, CA-CIB and Dexia. O3b said it expects global IP traffic to quadruple over the next five years, growing at more than 30 percent per year thanks to large contributions from emerging markets. The company has already sold a little over a third of its capacity on a global basis with the contracted backlog now standing at over $600 million.

 

NASA distributed $269 million in April to four U.S. commercial launch companies as part of the Obama administration’s National Space Policy to develop domestic alternatives to send astronauts to orbit.

    Of the 22 proposals received by NASA for the commercial crew development program, SpaceX, Sierra Nevada Corp., Blue Origin and Boeing were selected to receive program awards. Ending May 2012, the federal financing is covering a year of development and research work. NASA said the award winners would be paid as they meet milestones outlined in their proposals.

    The program was developed to take over the workload for the retiring space shuttle program, which will be retired before the end of the year. Until an alternative is developed, the United States will have to rely on Russian launchers, which are priced at $50 million per seat. NASA Program Director Philip McAlister said the commercial crew development program expects to yield results by 2015, depending on future financing available to NASA and the performance of the contract winners.

    “While 2015 is our most realistic time frame, we are hopefully going to make a lot of progress over this next year so we can get there as soon as we can,” McAlister said during the press conference.

   Boeing received the largest share of the commercial crew development program award, receiving $92.3 million to design a space capsule. Sierra Nevada received $80 million to fund the development of a small space plane capable of reaching low-Earth orbit. Blue Origin, a private space company established by Amazon founder Jeff Bezos, also will receive $22 million to work on a space capsule design.

    SpaceX, which is already under NASA’s COTS contract to carry cargo to the International Space Station, will receive $75 million to make its Falcon 9 medium-lift rocket and Dragon capsule suitable for manned missions. McAlister said SpaceX was selected due to the company’s pair of successful Falcon 9 launches in 2010 as well as its test of its Dragon capsule in December.