Satellite Operators Grapple With Excess Capacity and Falling Lease Rates

SPACEMART

"Satellite operators face numerous challenges that threaten to obstruct their path to greater profitability. Optimistic demand growth projections that led many operators to launch new transponders failed to materialize, leaving them with excess capacity and compelling them to reduce lease rates."

San Jose - Feb 13, 2003
Amidst unfavorable economic conditions and the melt down in the telecommunications industry, the satellite transponder capacity leasing market in Europe, the Middle East, and Africa represents a ray of hope, as it continues to experience consistent growth and significant profits.

New analysis from Frost & Sullivan, Commercial Geostationary Satellite Transponder Markets for Europe, the Middle East and Africa: Opportunities for Growth in an Uncertain World, reveals that revenues in this industry totaled $3.79 billion in 2002, and are projected to reach $4.88 billion by 2009.

"Overall, the satellite capacity market is doing fairly well, especially when compared to the negative trends being seen in other sectors of the telecommunications industry," says Frost & Sullivan Industry Analyst Patrick French.

However, satellite operators face numerous challenges that threaten to obstruct their path to greater profitability. Optimistic demand growth projections that led many operators to launch new transponders failed to materialize, leaving them with excess capacity and compelling them to reduce lease rates.

Further compounding this problem is the migration of video broadcasting from analog to digital signals. Increased efficiency allows for more content to be broadcast per transponder. This cuts into the demand for new capacity.

Moreover, the merger of major capacity lessors such as in the direct-to-home television sector is negatively affecting the demand for transponder capacity to relay programming.

"Operators must squarely address these issues or face the risk of significant price competition as market participants stoop to any means to get their transponders sold," says French.

While operators must compete with terrestrial networks to increase the use of satellites in fast growing networking applications, they must not lose sight of their biggest revenue generator, namely, video applications.

"Locking in the key video market is more important for long-term success than over-emphasizing the networking market," observes French.

Commercial Geostationary Satellite Transponder Markets for Europe, the Middle East and Africa: Opportunities for Growth in an Uncertain World Report: A398

SPACEMART

Lockheed Martin Completes Strategic Analysis of Commercial Space Systems

Bethesda - Jan 20, 2003
Following an analysis of strategic options in response to ongoing overcapacity issues in the commercial satellite-manufacturing marketplace, Lockheed Martin today announced it will advance and extend its aggressive realignment initiative, begun in July 2001, to consolidate and streamline management, engineering and manufacturing organizations within its Commercial Space Systems (LMCSS) business, which is located in Newtown, PA.

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