APStar

Hong Kong-based APT (Asia Pacific Telecommunications) Satellite Company, Ltd's APStar network was a late-arriving competitor to Asiasat is. Sponsored by the Government of China, APStar was a rival to the Asiasat system, APT Satellite is a consortium of four regional companies, with three of four founding members being Chinese state-owned entities. APT Satellite Company was formed in 1992 by the China Yuan Wang (Group) Corp., China Telecommunications Broadcast Satellite Corp. (ChinaSat), Ever-Victory System Company, and the Chia Thai Group of Thailand.

APT Group commenced its operation in 1992. As of 2013 it owned and operated five in-orbit satellites, namely, APSTAR 1, APSTAR 1A, APSTAR 5, APSTAR 6 and APSTAR 7 (“APSTAR Systems”) covering regions in Asia, Europe, Africa, and Australia approximately 75% of the World’s population and providing excellent quality “one-stop-shop” transponder, satellite telecommunications and satellite TV broadcasting and transmission services to broadcasters and telecommunication customers of these regions.

APT Satellite Co. moved rapidly from its formation in 1992 to the launch of APStar 1 on 21 July 1994 by a Chinese CZ-3. The Hughes HS-376 spacecraft was outfitted with 24, low-power (16W) C-band transponders. To cover the East Asian region (PRC, Hong Kong, Japan, Singapore, Indonesia, and Vietnam), APStar 1 was to have been located at 131 degrees E. However, concerns raised by Japan and Tonga about interference with spacecraft already in the 130-131 degree E area forced APStar to begin operations at 138 degrees E under a lease arrangement with Tonga (References 83-88).

In late 1993 APT Satellite Co. signed a contract with Hughes to provide an HS-601 model spacecraft for launch as APStar 2 in 1994, although the launch was later delayed until early 1995. APStar 2 was to carried a total of 34 transponders: 26 52-W C-band, 6 50-W Ku-band, and 2 120-W Ku-band (References 84 and 89). APSTAR II was launched on 26 January 1995, on a Long March 2E rocket from Xichang, China, but it was destroyed in an explosion shortly after liftoff.

This was the fifth flight of the Long March 2E rocket, and the second failure. The prior failure in December 1992 was of a Long March 2E rocket carrying the Optus B2 satellite, also manufactured by Hughes. In both cases, observation of the flight data and the rocket debris indicated that an explosive force had destroyed the forward part of the rocket where the satellite and the covering fairing, which is a part of the rocket, were located.

APT Satellite Holding was planning a direct broadcasting system service in China, pending approval from the authorities. APT Satellite plans to spend around $300 million for the direct broadcasting system in China, which allows improved reception of satellite information with smaller antennae. APT is seeking approval for the service from the Ministry of Broadcasting, Film, and Television in Beijing and hoped to receive approval in early 1998.

On August 18, 1999, APT entered into a lease agreement with Loral Asia Pacific Satellite (HK) Ltd. (“Loral Asia”), a wholly-owned subsidiary of Loral Space and Communications Limited, for the lease of 43 of the 44 transponders of APSTAR IIR. According to the lease agreement, Loral Asia is entitled to use the capacities of these transponders until their service spans expire. The lease price was approximately US$298 million, payable by eighteen installments in United States Dollars within four years. Loral Asia later proposed to advance the date of payment and, as a result, the lease price was revised to approximately US$273 million, payable in three installments, with the last installment of approximately US$181 million paid on March 27, 2000. According to the lease agreement and all relevant operating licenses, APT is responsible for the operational control of the satellite under the satellite service agreement with Loral Asia. According to the satellite service agreement, operational control of the services are provided until the end of life of the satellite, unless terminated by Loral Asia. As of December 31, 2003, 100% of the transponders’ capacities of APSTAR IIR was leased.

APSTAR I and APSTAR IA are HS-376 satellite models, APSTAR IIR and APSTAR V are FS-1300 models, and APSTAR VI is a SB-4100 C1 model. Although these models were chosen based on a number of factors, including risk management, there can be no assurance that the Company’s satellites will perform as designed. Significant defects in or damage to any of the Company’s satellites would adversely affect the Company’s results of operations and financial condition.

All satellites have limited operational lives, and the operational lives of APSTAR I, APSTAR IA and APSTAR IIR were estimated to end in 2004, 2006 and 2013, respectively. A number of factors affect the operational lives of satellites, including construction quality, component durability, fuel usage, the launch vehicle used and the skill with which the satellite is monitored and operated. There can be no assurance as to the actual operational life of APSTAR I, APSTAR IA or APSTAR IIR. The Company’s results of operations would be adversely affected if the operational life of APSTAR I, APSTAR IA, APSTAR IIR or any other satellite it may operate is significantly shorter than expected.

Technology in the broadcasting and telecommunications industry is in a rapid and continuing state of change, with new technological developments and innovations constantly emerging. If such developments and innovations were to decrease general commercial demand for the use of satellites of the type operated by the Company, the Company’s results of operations and financial condition could be materially adversely affected. Further, while the Company designs its satellites to incorporate state-of-the-art technology, there can be no assurance that the technology used in the Company’s satellites will continue to be the most advanced throughout the entire operational life of each satellite. Any technological lag which develops could result in lower rental fees after the initial rental term for any given transponder, and could therefore have a material adverse effect on the Company’s results of operations and financial condition.

The United States government has imposed certain restrictions on technology transfers to certain countries including the PRC. Export licenses for the deliveries of TT&C Systems and satellites are required to be obtained by Space Systems/Loral Inc. (“SS/Loral”), the manufacturer of APSTAR V, and manufacturers of other satellites that the Company may launch in the future in connection with launches in any country subject to restrictions on technology transfers.

In November 2001, the US government granted approval, valid until the end of 2003, for the construction of APSTAR V. On September 20, 2002, APT entered into a Term Sheet (the “APT-Loral Term Sheet”) with Loral Orion, Inc. (“Loral Orion”), a subsidiary of Loral Space and Communications Limited and subsequently entered into certain agreements. Under the APT-Loral Term Sheet and the agreements, Loral Orion agreed to participate in the development of APSTAR V by investing up to 50% of the capital necessary for the APSTAR V project on a pro rata basis in order to obtain rights to 27 transponders at a value of approximately US$115.0 million. In March 2003, the parties agreed to lower the number of transponders to be purchased by Loral Orion to 25, but Loral Orion’s capital commitment remains unchanged.

Three agreements regarding APSTAR V [TELSTAR 18], which would replace APSTAR I, to expire in mid-2004, were signed in Hong Kong 08 January 2001. The APT Satellite Company Limited, or APT(HK), a wholly-owned subsidiary of Asia's leading satellite transponder service provider APT Satellite Holdings Limited, signed the Satellite Procurement Agreement with the Space Systems/Loral (SS/L). Under the agreement, SS/L would provide APT(HK) with the design, manufacturing, tests and delivery of APSTAR V and is responsible for obtaining all necessary export permits for APSTAR V.

The total project cost of APSTAR V, which includes the costs of the satellite, launch service, launch insurance, ground facilities for telemetry, tracking and control, related expenses and capitalized interest, would amount to about US$230 million, which would be funded by bank loan and internal resources of the APT Satellite Holdings Limited.

The APT (HK) and the Singapore Telecommunications Limited (SingTel) signed a lease agreement for the leasing of 15 C-band transponders of APSTAR V for the life of the satellite. Upon completion, SingTel can either use the transponders capacity itself or lease it to its customers. The total lease price, in present value upon commencement of commercial operation, which is expected in the first quarter of year 2003, totals US$112 million. APSTAR V, with an expected mission life of more than 13 years, had 38 C-band and 16 Ku-band transponders to provide broadcasting and telecommunications services. It would be located at the geostationary orbital slot 138 degrees east. The footprint of C-band transponders would cover substantially all of the Asian countries in the Asia Pacific region while those of the Ku-band transponders would cover China and other parts of East Asia and Guam.

On September 20, 2002, Loral Orion, Inc. a subsidiary of Loral Space & Communications Ltd., entered into an agreement with APT Satellite Company Limited ("APT") pursuant to which Loral Orion would participate on a 50-50 basis in the ownership of the APSTAR-V satellite. Loral Orion's purchase price for its 50% interest in the satellite was $115.1 million, representing 50% of the current estimated cost of constructing, launching and insuring the APSTAR-V satellite. To ensure a timely launch of APSTAR-V, Loral Orion, APT and SS/L have agreed that, if a U.S. license to launch APSTAR-V on board a Chinese Long March rocket has not been secured by September 30, 2002, a Western launch provider would be used.

The China Great Wall Industry Corporation (CGWIC) was to launch APSTAR V, a high-power satellite to be made by the US-based Space Systems/Loral Inc., in February 2003. Under the agreement struck with APT(HK), CGWIC would provide the launch services for APSTAR V with the LM-3B launch vehicle at the Xichang Satellite Launch Center in February 2003. The commercial operation would take place in the first quarter of 2003.

On June 29, 2004, during the launch of an Apstar 5 satellite on a Sea Launch Zenit booster, the upper stage shut down 54 seconds early due to a wiring fault, leaving the satellite in a lower than planned orbit. The Sea Launch consortium, led by Energia, launched the Zenit rocket from its floating platform Odyssey at an equatorial launch site in international waters in the Pacific Ocean. The APStar 5 launch was considered a partial failure because the Zenit’s upper stage shut down prematurely, placing the satellite in a lower-than-intended orbit, but the spacecraft was able to reach its destination in GEO using its onboard thrusters without reducing its on-orbit lifetime.

Apstar 6 is a Chinese (Hong Kong) geostationry communications satellite that was launched by a Long March 3B rocket from Xichang Satellite Launch Center in Sichuan province at 12:00 UT on 12 April 2005. The 4.8 tonne satellite carries 38 C-band and 12 Ku-band transponders to provide digital multimedia transmissions to East Asian countries, India, and Australia, replacing the aging APSTAR 1A.

APSTAR VI satellite launched April 12, 2005 from southwestern China is equipped with anti-jamming feature, according to a press release issued by the Hong Kong-based APT Satellite Holdings Limited, which owns the satellite. APSTAR VI, which was incorrectly named "AsiaSat 6" in some reports, was launched at 8:00 PM from the Xichang Satellite Launch Center aboard a Long March 3B launch vehicle. The satellite was expected to be operational in June 2005. Manufactured by French satellite giant Alcatel Space, APSTAR VI is the fifth in-orbit satellite of the company and a powerful addition to the APSTAR fleet. APSTAR VI was planned for operation from 134 degrees East longitude as a replacement satellite to APSTAR IA.

APSTAR-V and APSTAR-VI epitomizes the new generation of high-power and high-reliability communication satellites. Given their outstanding performance, they are able to provide excellent quality of service to our broadcasting and telecommunications customers. Both APSTAR-V and APSTAR-VI C-band and Ku-band transponders provide broad coverage and optimal power to support such uses as TV program broadcasting, live satellite TV feeds, news gathering, corporate VSAT networks, distance learning, data broadcasting, internet backbone, broadband Internet access, cellular backhaul, etc. APSTAR-V and APSTAR-VI are separated in their orbital positions by 4 degrees longitude. Their close proximity allows for a good backup configuration in case of contingency. These satellites also possess high priority of orbital slot filing, as well as being able to aggregate broadcasting neighborhood effect over Greater China Area. These advantages guarantee the service integrity and reliability of our customer service transmissions and their cost-worthiness.

China successfully put a French-made communication satellite, APSTAR-7, into orbit with its Long March-3B carrier rocket on 31 March 2012. It lifted off from Xichang Satellite Launch Center in southwest China's Sichuan Province. APSTAR-7, developed by Thales Alenia Space, reached its designated orbit 26 minutes after launch. It will replace the APSTAR-2R, which has been in orbit about 16 years. APSTAR-7 is a high-power broadcasting and communication satellite that can provide TV transmission and satellite communication services to Asia, the Middle East, Africa, Australia and Europe, as well as live TV broadcasting and transcontinental communication and broadcasting services to China, the Middle East, Central Asia and Africa.

Subsequent to the successful launch of APSTAR 7 into its designated orbit on 31 March 2012, the Group had successfully maintained and migrated its existing customers from APSTAR 2R to APSTAR 7, in addition to signing several service agreements with new customers. During the Year, the Group maintained high utilization rates, with utilization rates of 74.6%, 80.4% and 74.2% for APSTAR 7, APSTAR 6 and APSTAR 5, respectively.

During the year 2012, APT Satellite Company Limited, the Group’s wholly-owned subsidiary, entered into a contract with China Great Wall Industry Corporation in respect of future satellites launch services for the Group involving an enhanced version of the Long March 3B (LM-3B/E) launch vehicle. The agreement is in line with the Company’s strategic plans to secure launch service opportunities at reasonable prices for the launch of its future satellites or replacement satellites.

On November 17, 2012 at the airshow, CGWIC signed New Launch Services Contract with APT Company, the Space Satellite Launch Vehicle Development Contract for Strategic Pioneer Program with National Space Science Center of Chinese Academy of Science, and the Framework Contract on a Satellite Program with APT Projects Company Limited etc, according to which CGWIC will be responsible for the manufacture and delivery of a communications satellite according to the requirement of APT Satellite Program Corp. The satellite will be designed by CAST using its DFH-4 platform with 50 transponders and 15 years of in-orbit life. It is planned to be launched by a CALT-manufactured LM-3B launcher in XSLC by the end of 2015. Moreover, CGWIC and APT Company signed a new launch services contract for future satellite program, launching a communication satellite by using a LM-3B launch vehicle.