Hughes gets Coface backing for Arianespace Jupiter launch

Hughes Network Systems has agreed a contract with Arianespace and secured financial backing from the French export credit agency COFACE for the launch of its next generation Ka-band satellite Jupiter in the first half of 2012.
COFACE has provided a…

Hughes Network Systems has agreed a contract with Arianespace and secured financial backing from the French export credit agency COFACE for the launch of its next generation Ka-band satellite Jupiter in the first half of 2012.

COFACE has provided a commitment letter to finance 85% of the Ariane 5 flight. In an SEC filing, Hughes stated that the total cost of the launch contract is US$118.5m.

The giant Jupiter satellite is being built by Space Systems Loral, and will have throughput capacity of 100 gigabits per second, more than ten times that of Hughes’ current flagship broadband satellite, Spaceway 3.

The deal follows the trend of export credit support for satellite operators which has become prevalent over the past year. Initially, export credit was secured through manufacturers, with Thales Alenia Space in particular benefitting from large scale Coface guarantees to Globalstar and O3B.

However, Arianespace has proven that launch providers are an equally valid path to export credit support. Late last year, UK operator Avanti received a US$101m guarantee from Coface after contracting with Arianespace for the launch of its HYLAS 2 satellite.

SatelliteFinance asked Clay Mowry, president of Arianespace USA, whether the company would consider raising its prices for contracts where it has been vital to the procurement of a Coface financing guarantee.

“I don’t think it has any real impact on launch prices,” he said. “There’s no doubt it has been playing an increasingly large role in the number of deals that can be done. What it does is that instead of a typical launch contract where we would be signing it up to two years in advance and receiving payments along the way, you are now doing bank financing that pays out over up to ten years. That is an advantage on a cash flow basis for the operators.”

Hughes announced the Arianespace contract along with its first quarter results. It recorded impressive adjusted EBITDA of US$43m, a 30% increase on Q1 2009.

Total consolidated revenue grew 1% year on year to US$243m.

The company’s strong performance was driven by the addition of 57,000 new subscribers to its broadband service during the first quarter. Consumer ARPU grew from US$68 to US$72 during this period.