Arabsat Aims to Assure Customers In Wake of Major Launch Failure By ANDY PASZTOR Wall Street Journal
March 14, 2006 6:14 p.m. http://online.wsj.com/article/SB114237381662098161.html?mod=technology_main_whats_news LOS ANGELES -- Middle Eastern satellite operator Arabsat, seeking to reassure customers and stave off rivals after a major launch failure two weeks ago, is considering leasing additional capacity and possibly even purchasing a satellite already in orbit. Confronting the total loss of its newest satellite valued at nearly $200 million, and with the timing of its next launch uncertain, Arabsat is mulling various responses, Chief Executive Khalid Ahmed Balkhyour said in an interview. The choices, which have to be made within the next few months, include shifting around customers and repositioning part of Arabsat's own fleet of four wholly-owned satellites. Other alternatives call for securing extra capacity from other operators. Further down the road, the Arabsat organization, which is based in Riyadh, Saudi Arabia, but has participation from more than a dozen other Arab countries, intends to spend roughly $500 million to buy and launch a pair of more-advanced satellites. But since those won't go into operation until late 2008 at the earliest, the immediate focus is on avoiding disruptions. Arabsat is reassuring customers, particularly broadcasters, of uninterrupted service for the long run. "All major European satellite operators, plus some from other regions, have contacted us" about quickly providing capacity to make up the shortfall, Mr. Balkhyour said. "But the gap is not as big as you might expect," he said, partly because Arabsat already has a new satellite that will be ready for launch "in a few months." Arabsat has "a contingency plan that involves only our current fleet," Mr. Balkhyour said. If Arabsat doesn't get outside offers of capacity "that represent an improvement and are viable from a financial or other standpoint," he said, the backup plan will be effected. On March 1, when an upper-stage rocket motor failed to operate properly, a Lockheed Martin Corp. and Russian joint venture was forced to leave the Arabsat-4A spacecraft in a useless orbit. Neither the Lockheed-led launch venture nor the satellite's manufacturer, the Astrium unit of European aerospace giant EADS, has publicly indicated the satellite is useless. But Arabsat's chief executive said he is in the process of asking insurers for compensation covering a total loss. A spokeswoman for the Lockheed venture said it is premature to discuss details of the rocket failure. Russian officials have said they plan to finish their assessment by the end of the month. Under an existing contract, a satellite is slated to be launched on the same version of the joint venture's Proton rocket perhaps as soon as late summer. However, it's unlikely that Lockheed and its Russian partners will finish all of their reviews and implement any necessary fixes by then. And if the investigations drag on, Mr. Balkhyour said Arabsat "may go to another launch provider." But such a switch could prove to be difficult, because all of the major rocket-launch companies are booked for the rest of the year. And in any event, the next satellite, which is even more important strategically for Arabsat, still must go through final testing. Arabsat faces substantial capital expenditures since its satellite fleet ranges in age from seven to 10 years. As the region's largest operator carrying more than 230 television channels, Arabsat was counting on the now-worthless satellite to help it compete against rivals, including Egypt-based Nilesat Co. The satellite was designed to provide direct-to-home television services, Internet connections and high-definition video programming. It was intended to replace outmoded capacity on Arabsat-owned and leased satellites. Since the failure, industry officials say Nilesat has tried to lure customers away from Arabsat. As part of its response, Arabsat soon expects to exercise an option to have Astrium manufacture an identical, fast-track replacement for the lost satellite. Meanwhile, larger operators such as PanAmSat Holding Corp. of the U. S. and France's Eutelsat S.A. have offered in-orbit capacity, industry officials said. But to avoid steep price hikes, Arabsat faces the challenge of demonstrating it has other viable options. Arabsat's chief executive said his organization is "not closing the door" to partnerships and alliances with other operators in and out of the region. But in terms of mergers or acquisitions, he said "I don't foresee anything in the near future." ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
