[4/2/07] Intelsat Ltd. will increase its capital expenditures in 2007 to cover accelerated construction and launch plans to meet demand for transponder capacity around the globe, Intelsat COO Jim Frownfelter said during a March 30 telephone conference to discuss the company’s 2006 financial performance.

Intelsat had planned expenditures of about $380 million to cover the construction or launch of five satellites in 2007, but total capital expenditures now will be $615 million to cover eight satellites.
“Market improvement are resulting in some compelling new opportunities for Intelsat,” Frownfelter said.

“The projects we have decided to improve have favorable business cases that include significant pre-launch commitments by customers allowing Intelsat to refresh capacity at key orbital locations with minimal financial risk, and redeploy additional assets to develop new roles in regions where demand exceeds supply.”

Intelsat has accelerated the manufacturing schedule of Intelsat-15, which had been scheduled for completion in 2009, and JSAT has agreed to make $60 million in payments to secure five dedicated transponders on the spacecraft, Frownfelter said.

The  accelerated construction schedule will allow Intelsat to shift the IS-709 satellite from Asia to the Middle East and Africa to meet strong demand in those regions, he added.

Intelsat plans to place four new satellites in orbit in 2007, beginning with the May launch of Galaxy-17 by Arianespace. Intelsat also has shifted the launch of Intelsat-11, formerly PAS-11, and Horizons-2 from Land Launch to a September Ariane 5 launch, in the wake of the January Sea Launch failure that destroyed an SES satellite.

Intelsat also will move up the construction schedule of a ground spare. “By continuing construction we are prudently protecting our DTH business in Brazil while improving our flexibility to repurpose the spacecraft” if Intelsat-11 reaches orbit, Frownfelter said.

Sea Launch is scheduled to place the Galaxy-18 satellite into orbit for Intelsat before the end of the year, but the date depends on the results of the Sea Launch failure investigation, Frownfelter said.
Intelsat expects the changes to results in a reduction in spending in 2009.

Intelsat reported revenues of $1.7 billion in 2006 but posted a loss of $368.7 million, the satellite operator announced. In 2005, Intelsat lost $325.3 million on revenues of $1.2 billion.

The increased loss in 2006 primarily was due to additional interest expense due to the debt associated with the PanAmSat acquisition, which was completed in July, and an increase in losses from an investment in WildBlue Communications Inc. The 2006 loss also included a $49 million charge to write down the book value of the IS-802 satellite, which suffered an anomaly in September, and $26.5 million in restructuring costs related to the acquisition of PanAmSat.

PanAmSat operations contributed revenue of $456.7 million to Intelsat in 2006, the company said.

Lease revenue increased $451.2 million, to $1.2 billion in 2006, while managed solutions revenue improved $62.5 million to $173.4 million. Channel revenue fell from $223.3 million in 2005 to $204.1 million in 2006, while Mobile Satellite Services and other revenue decreased $3.4 million to $74.6 million in the same period.

Intelsat’s backlog stood at $8.1 billion at the end of 2006, the company said.