Nimiq 5 launch and Activation Scheduled

[buckchow]

Launching satellites takes billions of dollars, and takes years from conception to final testing.

In each case, you can be sure that accountants have run spreadsheets and compared different ways of operation (DBS vs Ka, leasing vs owning, two arcs vs one, old unused satellite vs new one, changing customer dishes vs changing satellites,etc.).

You are suggesting that the accountants either don't or can't make mistakes that can cost Echostar large sums of money. Regardless of my being confused before about the current designated purposes of AMC-15 and AMC-16, everything I have read so far states that Echostar leased those from SES for the purpose of expanding bandwidth on Dish Network. The fact that they decided to use the AMC satellites for something else entirely strongly suggests that the accountants and/or other people in power at Echostar involved in approving the leases for those satellites decided they weren't such a great idea to them after all. It looks like they're trying to make some of their money back on the investment, but at this point they may wish they hadn't leased those satellites in the first place.

Just a thought.

 

[buckchow]

If you read up on the VIp service that was posted by Digiblur, it goes in depth explaining that the vip service is using the fleet of echostar sats for small cable companies that want to use echostar for their video services and set top boxes etc.

Yes, I saw that too, thanks. Neither site makes clear whether or not specific frequencies on the satellite have been sold, or if anything has been sold to anybody for that matter. At least Echostar is trying to get some kind of return on their investment in those sats.

 

[digiblur]

I'm learning. It's a process, and it's part of the reason I'm posting more rather than lurking. I know a lot things, but I don't know everything, nor will I ever.

I feel like I've made a meaningful contribution to this thread in a number of places, most especially with the breakdown of the lease expenses a few posts back.

Funny how I was promptly getting attacked earlier for not posting evidence to back up some of my claims and speculation, but when I posted evidence on the most significant factor of money ($500M-$1B total costs to rent half of a Ku-band satellite from the Canadians) the post evoked no response.

Not the most friendly environment I'm encountering here considering I'm just trying to contribute.

My take on your posts is you are only looking to find any little thing out of the ordinary and attacking it. But you are looking at Echostar as a residential satellite TV provider. They are far from that.

Sorry, but I haven't found any meaningful contribution in your posts. There are many reasons why there is EA, WA, and the other KU birds.

 

[Bradtothebone]

..........
Funny how I was promptly getting attacked earlier for not posting evidence to back up some of my claims and speculation, but when I posted evidence on the most significant factor of money ($500M-$1B total costs to rent half of a Ku-band satellite from the Canadians) the post evoked no response.

Not the most friendly environment I'm encountering here considering I'm just trying to contribute.

As with any lease deal, you have to look at the present value of leasing vs the owning and operating cost over the life of the asset (satellite). The figures you quoted:

"- Initial lease payment = $50 Million USD
- Monthly Charges - medium-power mode = $175,000 USD Per Transponder Per Month ($31.5 Million per transponder over their 15-year contract, or $504 Million for 16 transponders)
- Monthly Charges - high-power mode = $350,000 USD Per Transponder Per Month ($63 Million per transponder over their 15-year contract, or $1.008 Billion for 16 transponders)
- Late Payment fee - 1.5% compounded monthly, or 19.56% per year

So, Dish can lease HALF of the Canadian satellite for the 15-year term for a minimum of $554 Million, and as much as $1.058 Billion (EXCLUDING taxes, Government-related fees, and any of the many other kinds of fees that can be billed to Echostar). If they are allowed to lease more than that, just watch those figures rise even higher."
​

don't take present value into consideration. I did the math, using an interest rate of 7%, and the present value of leasing 16 medium power transponders for 15 years is about $361 million. 16 full-power transponders would be $672 million. Unless you have full access to the lease terms, I don't know how you could assume that Dish would be responsible for taxes and fees on top of lease payments. They may be, but we don't know.

I personally don't know what the present value of the 15-year owning and operating cost of a $250-300 million spacecraft is (including the launch, testing, monitoring, and debt service, and ????), but I would bet that it's similar to or more than the $672 million that Dish might pay for 16 full-power transponders over that time. I'll leave that exercise to someone who knows more about what it takes to operate a satellite.

I certainly don't fault you for asking these questions, but I don't think any of us on this board have all the inside information necessary to completely analyze the lease vs own question.

Brad

 

[buckchow]

As with any lease deal, you have to look at the present value of leasing vs the owning and operating cost over the life of the asset (satellite). The figures you quoted don't take present value into consideration. I did the math, using an interest rate of 7%, and the present value of leasing 16 medium power transponders for 15 years is about $361 million. 16 full-power transponders would be $672 million. Unless you have full access to the lease terms, I don't know how you could assume that Dish would be responsible for taxes and fees on top of lease payments. They may be, but we don't know.

I personally don't know what the present value of the 15-year owning and operating cost of a $250-300 million spacecraft is (including the launch, testing, monitoring, and debt service, and ????), but I would bet that it's similar to or more than the $672 million that Dish might pay for 16 full-power transponders over that time. I'll leave that exercise to someone who knows more about what it takes to operate a satellite.

I certainly don't fault you for asking these questions, but I don't think any of us on this board have all the inside information necessary to completely analyze the lease vs own question.

Brad

Thanks, that's some very interesting info. I definitely hadn't been considering how the value of money changes over time.

I've been poking around the web and Dish's SEC filings to try to find any hints as to owned satellite costs (including research, launch, etc), but haven't found any concrete info yet. As for leased satellites, Echostar is losing money on AMC-15 and AMC-16 ($217.7M in 2008) due to excess, unsold capacity. I'm sure there's specific information on owned satellites somewhere, but there's a lot of info to sift through.

As for taxes and fees relating to the Nimiq 5 lease, here's the main info from the FCC application:

3.4 Taxes and Other Charges.

(a) General. The amounts due and payable to Bell ExpressVu
under this Agreement are exclusive of all taxes (including, without limitation, any withholding
taxes), duties and other charges levied by a Governmental Entity directly related to the EchoStar
Channel Service provided by Bell ExpressVu, including any present or future Federal, state or
local excise, sales or use taxes or other governmental charges or assessments with respect to the
use of the EchoStar Channel Services. EchoStar will pay directly, or promptly reimburse Bell
ExpressVu for, all such taxes, duties and other charges.

 

[rocatman]

In regards to Dish leasing AMC-15 and AMC-16, plans do change as various factors including industries' overall demand for satellite capacity which certainly is less during the current economic downturn. Obviously the AMC-15 and AMC-16 leases have not paid off for Dish but may in the future. They do provide some emergency backup capacity just in case one or more of their other satellites fail. I don't if DirecTV has this type of backup capacity in case of satellite failure. Similarly DirecTV plans changed for the use of the Spaceway satellites from internet access to Direct-to-Home video service. Another recent factor is the opening up of the "reverse DBS" frequencies by the FCC. Dish has applied for licenses at 61.9 W, 77.2 W, 110 W, 114.5 W and 119 W. DirecTV has similar applcations for slots around the 101 W slot. It will be interesting to see how both companies develop these "reverse DBS" slots especially for HD locals and the large bandwidth requirements both companies are going to need. One area that might be a concern for DirecTV is the ability to use all their slots around 101 W and be able to design a single dish to receive signals from most of these without making it extremely costly and complicated to design and install.

 

[rocatman]

Back on the original topic, it does appear that Dish may have an opportunity to lease the other 16 TPs at 72.7 W on Nimiq 5 based on the FCC application narrative. I did a brief search the "supposed redacted sections" of the agreement with Bell but could not find anything. It is kind of funny how one can see the redacted sections of the agreement by just copying them and pasting them into another document. Someone at Dish or their law firm handling this should get fired for this obvious screwup.