Eutelsat Communications reports that the performance of the W2M satellite, which was launched on 20 December 2008, does not comply with the requirements set with the spacecraft's manufacturer, EADS Astrium/ISRO Antrix, following a major anomaly affecting the satellite's power subsystem.

This anomaly occurred during the satellite's transfer from the location used for in-orbit tests to its operating position at 16 degrees East where its mission was to replace well in advance Eutelsat's W2 satellite.

In the interests of protecting continuity of service for clients leasing capacity at the 16 degrees East position, Eutelsat has consequently taken the decision that in the current circumstances W2M will not be integrated into Eutelsat's satellite fleet.

Currently under the control of ISRO, the satellite is undergoing a full technical investigation by ISRO and EADS.

In this current context Eutelsat is pursuing the following actions:

+ W2 will continue its mission at 16 degrees East with no impact on currently operational services.

+ Eutelsat's W3B satellite, ordered in February 2008, and designed with a high degree of flexibility to ensure Ku-band continuity at either 16 degrees East, 10 degrees East or 36 degrees East, will now be deployed at 16 degrees East.

+ Scheduled for launch in mid-2010, W3B will increase the number of operational transponders at 16 degrees East from 27 to 56.

+ Eutelsat is analysing options using its existing in-orbit resources for meeting the requirements of clients who were expected to benefit from the increased capacity on W2M in comparison to W2. The number of operational transponders at 16 degrees East was scheduled to increase from 27 to up to 30.

Commenting on these decisions, Eutelsat Communications Chairman and CEO Giuliano Berretta said: "The situation affecting W2M is a serious disappointment for Eutelsat. However, for many years we have pursued a strategy based on securing and expanding our in-orbit resources in order to mitigate this type of risk.

"Our current investment programme consequently combines early renewal of operating satellites, together with securing the fleet through readily available back-up resources, and expansion of services with larger satellites.

"This policy puts us in a position to absorb the unavailability of W2M without impact on the continuity of service we provide our customers."

Eutelsat confirms that the unavailability of W2M does not impact on the Group's guidance for revenues in excess of 900 million euros for the 2008-2009 financial year. The W2M satellite programme is fully insured.