Measat Satellite scraps RM702mil contract with Astro

Astro expects no operational impact from the contract termination, saying there is sufficient capacity and redundancy is available across its existing leased transponders from current satellites.

KUALA LUMPUR: Commercial satellite operator Measat Satellite Systems Sdn Bhd (MSS) has scrapped a US$166.4mil (RM702.4mil) agreement to supply back-up transponder capacity to Astro Malaysia Holdings Bhd’s TV services and radio broadcasting arm.

MSS, which inked a conditional agreement with Astro’s unit Measat Broadcast Network Systems Sdn Bhd (MBNS) in May 2013 to supply the capacity, aborted the deal through a “no-fault terminating event,” Astro told Bursa Malaysia.

The capacity was to come from six Ku-band transponders on the to-be-launched Measat-3c (M3c) satellite. MSS has the right to abort the deal if the satellite was not launched by Nov 15, 2016, and it wasn’t.

Following that, MSS has terminated its satellite agreements to procure M3c.

Astro said no penalties were due under such event and no payment had been made under the supply of transponder capacity agreement.

The proposed utilisation was intended to act as back-up capacity if the M3b satellite failed to launch and start operations in 2014 or if there was a breakdown in any of the Astro group’s Ku-band transponders on other satellites.

Under the agreement, MBNS would utilise transponder capacity of six Ku-band transponders on the M3c satellite in tranches over a 15-year period.

The annual fee per Ku-band transponder would be US$1.8mil for the first two years, US$2mil for the next four years, and US$2.2mil for the rest of the contract period. Hence the total fee would be US$166.4mil.

MSS’ ultimate holding company is MAI Holdings Sdn Bhd. T. Ananda Krishnan, who is Astro’s substantial shareholder through Usaha Tegas Sdn Bhd, controls MAI.

Effect of termination

“The board is of the view that there is no financial or operational impact to the company from this termination as sufficient capacity and redundancy is available across its existing leased transponders from current satellites especially as technology advancement has enabled efficient utilisation of existing transponders,” Astro said.

Nonetheless, it said, MBNS was in discussions on additional satellite and/or transponder capacity required for the longer term.