November 29, 2004

Intelsat Satellite Loss May Threaten Sale

BETHESDA, Md. -- The electrical failure of a communications satellite owned by Intelsat Ltd. could threaten the planned $3.1 billion sale of the pioneering satellite operator.

The Bermuda-based company said its Americas-7 satellite was lost following a sudden "electrical distribution anomaly" on Sunday. The satellite, launched in September 1999, provided service to North America, Alaska, Hawaii, and parts of South America.

The loss of the satellite gives Zeus Holdings Ltd. the right to cancel its acquisition of Intelsat under the agreement announced in August. Zeus, an investment consortium, is evaluating the impact of the loss, Intelsat said in a statement Monday.

Intelsat, which wasn't insured for the loss, said it was making other satellites available to most of its customers, some of whom already have had their services restored. The company's satellites provide voice, data and video broadcast services in about 200 countries and territories.

One of Intelsat's customers, Starband Communications Inc., said the outage has cut off Internet access for 20,000 subscribers, a majority of that company's customer base.

"It really is a bit of a crisis," said Howard Lossing, vice president of marketing for the McLean, Va., company. Affected customers eventually will have to point their dishes pointed at a new satellite, he said.

Intelsat said the upcoming launch of the IA-8 satellite, currently scheduled for Dec. 17, will help mitigate the loss. The company is working with Space Systems/Loral, the manufacturer of the satellite, to identify the cause of the problem.

Privatized in 2001, Intelsat was a pioneer in satellite communications, created in 1964 through a consortium among 147 nations.

Lockheed Martin of Bethesda, Md., owns a 24 percent stake, while France Telecom and VSNL of India own 5 percent apiece.

Intelsat recently expanded its network fleet to 28 satellites with the purchase of five spacecraft from Loral Space & Communications Ltd. for $1.1 billion. It also leases capacity on two other satellites,


On the Net:

Intelsat: www.intelsat.com

Starband: www.starband.com