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. Last Updated: 07/27/2016

Intersputnik Pushes Back 3 Satellite Launches

Though still a major player on the telecoms market, Intersputnik, the international provider of space telecommunications, had to postpone the launch of several satellites this year and put back the deadline for construction of the worldwide satellite system from 2001 to 2003.

"We planned to have three satellites in orbit by the end of this year, but had to postpone the launches," said Stefan Kollar, sales manager with Intersputnik. He declined to comment on the reasons for the delay.

But analysts said Friday that low market demand for space-based transmissions was at least partly to blame for the launch postponements.

Intersputnik's LMI-1 satellite launched last September provides more than enough capacity to meet the local market demand, analysts said.

"A large share of the satellite's capacity was put up for sale on the secondary market soon after Intersputnik sold it to the clients," said Andrei Braginsky, a telecommunications analyst with Renaissance Capital.

Rostelekom and Sistema Telekom obtained a substantial share of LMI-1's capacity on long-term lease, though Rostelekom would be happy to resell part of the transponders used to transmit telephone signals, said Rostelekom officials.

A one-year lease on C-band transponders used to transmit telephone signals can cost from $1.3 million to $1.5 million, while a lease on Ku-band transponders, which transfer multimedia and digital television signals can fetch some $2 million to $2.8 million a year, analysts said.

However, both types of transponders could be sold at a discount due to the low demand on the market.

Intersputnik splits profits from operations between the governments of the 24 member countries - predominantly nations of the former Soviet bloc - that form the consortium.

The Soviet Union originally set up Intersputnik in 1971 as a response to the launch of another space telecommunications provider, Intelsat, which was backed by the major Western superpowers.

Along with the existing LMI-1 satellite, Intersputnik needs to put three more satellites into orbit before it can start providing telecommunication services on a worldwide basis. For now its coverage does extend to the West Coast of the United States and the Pacific Ocean.

Intersputnik has previously said the complete satellite system would be up and running by 2001, though it recently extended the deadline to 2003.

But analysts say Intersputnik may miss even the 2003 date if the telecommunications market does not pick up.

"Whether they meet the deadline in 2003 will depend on many factors, the major one being the general state of the economy, which feeds demand for telecommunication services," said Andrei Bogdanov, a telecommunications analyst with Alfa Bank.

However, Intersputnik does not seem too concerned about the depressed demand and is instead concentrating on the clients and projects it already has, said company officials.

Intersputnik owns one satellite through a joint venture with U.S.-based Lockheed Martin and leases seven satellites from Space Communications, a state-owned company that provides telecommunication services to the government and runs about a dozen satellites.

It services the Railroads Ministry's TransTeleCom and transmits television signals for several television channels, including TV 6, TV Center and Ren TV.

According to company officials, Intersputnik controls some 50 percent of the local market, estimated to be worth some $300 million annually. Sales have increased five to six times over the past eight years, officials said.

In order to upgrade the obsolete space network, Intersputnik and Space Communications in March launched the Express-A and intend to launch another one in June to provide coverage for the Atlantic basin.

The LMI-1 satellite already provides high-quality coverage on the territory of Russia, the Middle East and Southeast Asia, analysts said.

"Due to a lack of domestic demand for LMI-1, they will try to tap into the booming telecommunications market in Asia," Braginsky said.

Though here too Intersputnik is likely to still face competition from international consortiums, the largest of which are Intelsat, AsiaSat and Eutelsat.

Intelsat has about 20 satellites and 120 members, five times more than Intersputnik, though both are considered to be the major players on the global satellite market because other providers focus on particular regions.