================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM 6-K

           REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
                  15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
                          FOR THE MONTH OF AUGUST 2003

                          Commission File No. 333-8880

                        SATELITES MEXICANOS, S.A. de C.V.

                          Blvd. M. Avila Camacho No. 40
                            Col. Lomas de Chapultepec
                               11000 Mexico, D.F.
                                     Mexico
                                (52) 55-5201-0800

      The registrant files annual reports under cover of Form 20-F.

      The registrant is not furnishing the information contained in this form to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.

================================================================================

<PAGE>

      Satelites Mexicanos, S.A. de C.V. ("Satmex") did not make the August 1,
2003 interest payment on its 10 1/8% Senior Notes due 2004 (the "Fixed Rate
Notes"). The amount of the interest payment due was $16.2 million. According to
the indenture governing the Fixed Rate Notes, Satmex has 30 days from August 1
to make the payment in order to avoid an Event of Default as defined in the
indenture. Satmex's decision was made in order to conserve cash and to complete
payments necessary to insure and launch its new Satmex 6 satellite as scheduled
for later this year.

      Satmex intends to take measures to approach Fixed Rate Noteholders
regarding a debt restructuring plan. To that effect, Satmex filed a registration
statement with the U.S. Securities and Exchange Commission (the "SEC") relating
to a proposed exchange offer for the Fixed Rate Notes on July 21, 2003. Satmex
also continues to work toward the completion of the financing of the Satmex 6
satellite with the U.S. and French Export Credit Agencies.

      As described above, a registration statement relating to the new Fixed
Rate Notes to be issued in the exchange offer has been filed with the SEC but
has not become effective. These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes effective and
Satmex has obtained the necessary authorizations from the Comision Nacional
Bancaria y de Valores de Mexico. This announcement shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or in Mexico in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state or of Mexico.

<PAGE>

                        SATELITES MEXICANOS, S.A. de C.V.

                              FINANCIAL INFORMATION

                                      INDEX

                                                                            Page
                                                                            ----
Financial Statements (Unaudited):
   Condensed Balance Sheets as of June 30, 2003 and
      December 31, 2002 ...................................................   2
   Condensed Statements of Operations for the three and
      six months ended June 30, 2003 and 2002 .............................   3
   Condensed Statements of Cash Flows for the six months
      ended June 30, 2003 and 2002 ........................................   4
   Notes to Unaudited Condensed Financial Statements ......................   5
Operating and Financial Review and Prospects ..............................   10


<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

                            CONDENSED BALANCE SHEETS
                     (Amounts in thousands of U.S. dollars)
                                   (Unaudited)

                                                         June 30,   December 31,
                                                           2003         2002
                                                        ---------   ------------
                                                                       (Note)
                                     Assets

Current assets:
      Cash and cash equivalents ......................  $  16,988    $   26,822
      Restricted and segregated cash .................                    6,817
      Accounts receivable, net .......................      3,522         5,597
      Prepaid insurance ..............................      3,102         6,440
      Due from related parties .......................      6,525         4,796
      Deferred income taxes ..........................      1,789         1,385
                                                        ---------    ----------
         Total current assets ........................     31,926        51,857
      Satellites and equipment, net ..................    272,525       289,637
      Construction in process - Satmex 6 (Note 1) ....    237,388       214,903
      Concessions, net ...............................    444,163       450,616
      Deferred financing costs, net ..................      2,925         3,671
      Other assets ...................................      1,087           410
                                                        ---------    ----------
         Total assets ................................  $ 990,014    $1,011,094
                                                        =========    ==========

                      Liabilities and Stockholders' Equity

Current liabilities:
      Current maturities of long-term debt ...........  $ 203,874    $    1,000
      Accounts payable ...............................      2,732         2,788
      Accrued expenses ...............................      2,483         6,407
      Interest payable ...............................     14,196        14,196
      Due to related parties .........................      3,385         2,231
      Deferred revenue - customers ...................      2,004         2,213
      Deferred revenue - Mexican government ..........      2,200         2,200
                                                        ---------    ----------
         Total current liabilities ...................    230,874        31,035
      Accrued expenses, non current ..................      3,276         3,276
      Due to related parties. ........................        583
      Deferred revenue - Mexican government ..........     73,435        74,535
      Deferred income taxes ..........................      7,070        10,194
      Long-term debt .................................    320,000       523,374
                                                        ---------    ----------
         Total liabilities ...........................    635,238       642,414
                                                        ---------    ----------

Commitments and contingencies (Note 6)
Stockholders' equity:
      Preferred stock ................................     31,886        31,886
      Common stock ...................................    385,808       385,054
      Accumulated deficit ............................   (62,918)      (48,260)
                                                        ---------    ----------
         Total stockholders' equity ..................    354,776       368,680
                                                        ---------    ----------
         Total liabilities and stockholders' equity ..  $ 990,014    $1,011,094
                                                        =========    ==========

----------
Note: The December 31, 2002 balance sheet has been derived from the audited
financial statements at that date.

             See notes to unaudited condensed financial statements.


                                       2
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

                       CONDENSED STATEMENTS OF OPERATIONS
                     (Amounts in thousands of U.S. dollars)
                                   (Unaudited)

                                        Three months ended    Six months ended
                                             June 30,             June 30,
                                        ------------------  --------------------
                                          2003      2002      2003        2002
                                        --------   -------  ---------   --------
Service revenue ......................  $ 19,385   $20,400  $  40,188   $ 43,009
                                        --------   -------  ---------   --------
Operating expenses:

  Satellite operations ...............     3,357     4,714      7,002      9,623

  Selling and administrative
    expenses .........................     5,147     4,275     10,792      8,693

  License and management fees ........       274       271        568        574

  Depreciation expense and
     amortization of concessions .....    11,971    11,848     23,901     23,652
                                        --------   -------  ---------   --------
                                          20,749    21,108     42,263     42,542
                                        --------   -------  ---------   --------
Operating (loss) income ..............   (1,364)     (708)    (2,075)        467

Interest income ......................        80       645        157      1,560
Interest expense and amortization of
  deferred financing costs. ..........   (7,791)   (9,828)   (15,633)   (20,750)
Net foreign exchange gain ............        55        30        119          6
                                        --------   -------  ---------   --------
Loss before deferred income tax ......   (9,020)   (9,861)   (17,432)   (18,717)
Deferred income tax benefit ..........     1,820     9,774      3,528     10,977
                                        --------   -------  ---------   --------
Net loss .............................   (7,200)      (87)   (13,904)    (7,653)
Preferred stock dividend
  requirement ........................     (377)     (377)      (754)      (754)
                                        --------   -------  ---------   --------
Net loss applicable to common
  stockholders .......................  $(7,577)   $ (464)  $(14,658)   $(8,494)
                                        ========   =======  =========   ========

             See notes to unaudited condensed financial statements.


                                       3
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

                       CONDENSED STATEMENTS OF CASH FLOWS
                     (Amounts in thousands of U.S. dollars)
                                   (Unaudited)

                                                              Six months ended
                                                                  June 30,
                                                            --------------------
                                                              2003       2002
                                                            ---------  ---------
Operating activities
Net loss ................................................   $(13,904)  $ (7,740)

Adjustments to reconcile net loss to operating
   cash flow:
   Depreciation expense and amortization of
     concessions ........................................      23,901     23,652
   Amortization of deferred financing costs .............       1,241      1,151
   Deferred revenue - customers .........................       (209)        188
   Deferred revenue - Mexican government ................     (1,100)    (1,100)
   Deferred income taxes ................................     (3,528)   (10,977)
   Interest income from restricted and segregated cash ..         (5)    (1,112)
   Use of restricted and segregated cash for interest
     payments ...........................................         177      8,047

Changes in assets and liabilities:
   Accounts receivable ..................................       2,075    (3,380)
   Prepaid insurance ....................................       3,338      3,761
   Accounts payable and accrued expenses ................     (3,980)   (11,786)
   Due from/to related parties ..........................           8      2,609
   Deferred financing costs and other assets ............     (1,172)      (495)
                                                            ---------  ---------
Cash flow provided by operating activities ..............       6,842      2,818
                                                            ---------  ---------
Investing activities
Use of restricted and segregated cash ...................       6,645     68,785
Construction in progress - Satmex 6 .....................    (22,485)   (69,475)
Acquisition of equipment, net ...........................       (336)    (1,009)
                                                            ---------  ---------
Cash flow used in investing activities ..................    (16,176)    (1,699)
                                                            ---------  ---------
Financing activities
Use of restricted and segregated cash ...................                 13,126
Repayment of senior secured notes .......................       (500)   (13,126)
                                                            ---------  ---------
Cash flow used in financing activities ..................       (500)
                                                            ---------  ---------
(Increase) decrease in cash and cash equivalents ........     (9,834)      1,119
Cash and cash equivalents - beginning of period .........      26,822     26,194
                                                            ---------  ---------
Cash and cash equivalents - end of period ...............   $  16,988  $  27,313
                                                            =========  =========
Supplemental disclosure
Interest paid ...........................................   $  23,341  $  24,983
                                                            =========  =========

             See notes to unaudited condensed financial statements.


                                       4
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                            (Amounts in U.S. dollars)

1. THE COMPANY

      Satelites Mexicanos, S.A. de C.V. (the "Company" or "Satmex") owns and
operates two geosynchronous communications satellites, Solidaridad 2 and Satmex
5. Satmex also owns another satellite, Morelos 2, which is in an inclined orbit
and does not generate operating revenue. Satmex operates in one business segment
and is the leading provider of fixed satellite services ("FSS") to broadcasting
and telecommunications customers in Mexico. Satmex has landing rights to provide
broadcasting and telecommunications transmission capacity in Mexico, the United
States, Canada and 37 nations and territories in the Latin American region.

      On November 17, 1997, Loral Space & Communications Ltd. (together with its
subsidiaries "Loral") and Principia, S.A. de C.V. ("Principia"), through
Firmamento Mexicano, S. de R.L. de C.V. ("Firmamento"), acquired 75% of the
issued and outstanding capital stock of Satmex from the government of Mexico for
$646.8 million. Firmamento is owned 65% by Loral and 35% by Principia. Principia
holds 51% of Firmamento's voting interests. The remaining 25% of Satmex's
capital stock was retained by the Mexican government.

      In consideration of the debt incurred by Satmex in connection with the
acquisition, Servicios Corporativos Satelitales, S.A. de C.V. ("Servicios"), a
wholly-owned subsidiary of Firmamento, agreed to pay to the Mexican government
$125.1 million (the "Government Obligation"). The Government Obligation accrues
deferred interest at the rate of 6.03% per annum, compounds annually and matures
in December 2004. Payment of the Government Obligation is currently secured by
Loral's and Principia's interests in Firmamento.

      In August 2000, Satmex's Solidaridad 1 satellite, located at 109.2 degrees
W.L., ceased operating and was considered irretrievably lost. The loss was
caused by the failure of the back-up control processor on board the satellite.
Solidaridad 1 was built by Hughes Space and Communications and commenced service
in January 1994. Solidaridad 1 was insured for $250 million. At the date of the
loss, Solidaridad 1 had a net book value of approximately $109.6 million. After
deducting prepaid insurance of $1.6 million, the unpaid insurance premiums of
$12.5 million and on-going monitoring costs and the excess of the estimated cost
over revenue for the currently committed transponder capacity to be provided to
customers of $23.2 million, the net gain on the in-orbit failure of Solidaridad
1 was approximately $103.1 million. In 2001, Satmex reduced the liability for
the cost over revenue for the committed transponder capacity to be provided to
customers by $7.3 million. In 2002, the Company received $3.3 million from the
satellite manufacturer under the Solidaridad 1 performance guarantee and Satmex
reduced the liability for the cost over revenue for the committed transponder
capacity to be provided to customers by $5.1 million. These transactions were
recorded as additional gain on the in-orbit failure of Solidaridad 1 in the
applicable periods. In January 2001, Satmex received insurance proceeds of
approximately $235.3 million, net of the unpaid insurance premiums and related
value added tax.

      Satmex used the net insurance proceeds towards the construction, launch
and insurance of a replacement satellite, Satmex 6, as well as for debt service.
Satmex 6 was designed to provide broader coverage and higher power levels than
any other satellite currently in the Satmex fleet. Satmex contracted with Space
Systems/Loral, Inc., a wholly owned subsidiary of Loral, to build Satmex 6.
Certain manufacturing and testing procedures have resulted in the launch of
Satmex 6 being extended to the latter part of 2003.

      As a result of schedule delays, Satmex and Space Systems/Loral have agreed
that Satmex 6 will be delivered in 2003. Under the original contract, Satmex
earned certain liquidated damages as a result of the delay. An amendment to the
contract was subsequently executed, which, among other things, transferred title
of the satellite to Satmex, waived the liquidated damages in exchange for a like
amount of other benefits that include additional work required on the satellite,
reduced future orbital incentive payments due to Space Systems/Loral. In
addition, Satmex and Loral separately agreed to waive the intellectual property


                                       5
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

          NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Continued)

fees for a two year period, and Satmex, Loral and Principia agreed to waive the
management fees for a two year period.

      In order to provide expanded satellite services in the United States with
the Satmex 6 satellite, a new coordination agreement is being negotiated between
the governments of Mexico and Canada, as well as the affected satellite
operators. New coordination agreements are often negotiated to accommodate the
operation of new satellites. An existing coordination agreement between the
governments of Mexico and Canada, as well as the affected satellite operators,
provides for the operation of Mexican and Canadian satellites, including Satmex
6, in the 107.3(degree)W.L. to 118.7(degree)W.L. orbital arc. There can be no
assurance that negotiation of a new coordination agreement between the
governments of Mexico and Canada and the affected satellite operators will be
successful. The scheduled launch of Satmex 6 will proceed whether or not a new
coordination agreement has been negotiated. However, the inability to conclude a
satisfactory agreement may negatively affect the Company's ability to provide
expanded services in the United States and could adversely affect the business.

      In April 2001, Satmex 5, a BS601HP spacecraft, experienced temporary
difficulties starting the back-up propulsion system of the Xenon Ion Propulsion
System ("XIPS"), which provides station-keeping capability for the satellite.
Using procedures provided by the satellite manufacturer, we were able to start
the back-up propulsion subsystem, and at no time was service on Satmex 5
interrupted. Failures related to XIPS have occurred on other BS 601 HP
spacecraft. Performance on both Satmex 5 XIPS systems is normal. Currently,
however, we are using the second XIPS system as the primary propulsion system
and the first system as the back up. In addition, Satmex 5 has a chemical
propulsion system in place to provide further redundancy.

2. BASIS OF PRESENTATION

      The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules of the Securities and Exchange Commission ("SEC")
on a consistent basis for the six months ended June 30, 2003 and 2002, and in
the opinion of the Company, include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of results of operations,
financial position and cash flows. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed as
permitted pursuant to such SEC rules. The Company believes that the disclosures
made are adequate to keep the information presented from being misleading. The
results of operations for the six months ended June 30, 2003, are not
necessarily indicative of the results to be expected for the year. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto of Satmex as of December 31, 2002 and 2001and for
each of the three years in the period ended December 31, 2002, included in
Satmex's Annual Report on Form 20-F for the year ended December 31, 2002, which
was filed with the SEC on June 30, 2003.

Reclassifications

      Certain reclassifications have been made to conform prior period amounts
for the year ended December 31, 2002 and the six months ended June 30, 2002, to
the current presentation.


                                       6
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

          NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Continued)

3. ACCOUNTS RECEIVABLE
                                                    June 30,      December 31,
                                                      2003            2002
                                                    --------     --------------
                                                                 (in thousands)
    Customers ...................................   $ 3,927           $ 6,770
    Value added tax recoverable .................       833               526
    Other .......................................     1,300               470
    Allowance for uncollectible accounts ........   (2,538)           (2,169)
                                                    -------           -------
                                                    $ 3,522           $ 5,597
                                                    =======           =======

Provisions for bad debts were $400,000 and $0 and charge-offs were $31,000 and
$456,000 for the six months ended June 30, 2003 and 2002, respectively.

4.  SATELLITES AND EQUIPMENT
                                                 June 30,       December 31,
                                                   2003             2002
                                                 --------      --------------
                                                               (in thousands)
    Satellites ..............................   $  409,119        $  409,119
    Equipment ...............................       30,823            30,677
    Furniture and fixtures ..................        6,653             6,664
    Leasehold improvements ..................        4,374             4,371
    Construction in progress ................          589               455
                                                ----------        ----------
                                                   451,558           451,286
    Accumulated depreciation ................    (179,033)         (161,649)
                                                ----------        ----------
                                                $  272,525        $  289,637
                                                ==========        ==========

5.  BALANCES AND TRANSACTIONS WITH RELATED PARTIES

                                                June 30,      December 31,
                                                 2003             2002
                                                --------     --------------
                                                             (in thousands)
    Amounts receivable:
    Enlaces ................................     $3,126          $2,900
    Mexican government agencies ............      2,204           1,887
    Loral ..................................      1,195
    Service companies ......................                          9
                                                 ------          ------
                                                 $6,525          $4,796
                                                 ======          ======
    Amounts payable:
    Service companies ......................     $2,524          $1,881
    Loral ..................................        861             314
    Enlaces ................................                         36
                                                 ------          ------
                                                 $3,385          $2,231
                                                 ======          ======
    Amounts payable long term:
    Loral ..................................     $  583
                                                 ======

Transactions with related parties, not otherwise disclosed, are as follows:

Enlaces

      Enlaces Integra ("Enlaces"), a company owned by Principia and Loral,
leases transponder capacity and teleport equipment from Satmex. Revenue from
these leases was $491,000 and $343,000 for the six months


                                       7
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

          NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Continued)

ended June 30, 2003 and 2002, respectively. Satmex agreed to loan Enlaces up to
$5 million of which $3.4 million was outstanding as of December 31, 2001. The
loan to Enlaces would have matured on January 4, 2006 and accrued interest at a
rate equal to Satmex's weighted average interest cost plus 1%. The maximum
available borrowing is $5 million, including accrued interest. In June 2002,
Satmex purchased approximately $718,000 of equipment from Enlaces and in July
2002, Satmex purchased $1.6 million of equipment and paid $2.9 million as an
advance payment on one of the concessions held by Enlaces. Enlaces immediately
used the proceeds from the sale to repay fully its outstanding loan from Satmex.
At June 30, 2003, there were no borrowings outstanding under the loan agreement.

Revenue

      Revenue from related parties, primarily the Mexican government, was $4.6
million and $5.0 million for the six months ended June 30, 2003 and 2002,
respectively.

Replacement capacity

      Loral Skynet, a wholly owned subsidiary of Loral, billed Satmex $0.9
million and $3.0 million for the six months ended June 30, 2003 and 2002,
respectively, for providing capacity on Loral Skynet satellites.

Commissions

      Loral Skynet billed Satmex $178,000 and $214,000 for sales commissions for
the six months ended June 30, 2003 and 2002, respectively.

Management fee

      Loral and Principia are responsible for managing Satmex. Loral and
Principia receive a management fee, based on a sliding scale, up to a maximum of
3.75% of the Company's quarterly gross revenue, as defined. For the six months
ended June 30, 2003 and 2002, no management fee was due. Loral and Principia
have waived the management fee for the two years subsequent to the closings of
the financings for the completion, launch and insurance of Satmex 6, provided
such financings close by October 31, 2003.

License fee

      Loral has licensed certain intellectual property to Satmex for an annual
fee of 1.5% of the Company's gross revenue, as defined. For the six months ended
June 30, 2003 and 2002, the fee was $583,000 and $620,000, respectively, of
which $15,000 and $46,000, respectively, was offset against Solidaridad 1
estimated cost over revenue for the currently committed transponder capacity to
be provided to customers. Loral has waived the license fee for the two years
subsequent to the closings of the financings for the completion, launch and
insurance of Satmex 6, provided such financings close by October 31, 2003.

Rent

      The equipment in the satellite control centers is owned by the Company,
while the land and buildings that house these centers are property of the
Mexican government. The Company pays rent to the Mexican government for the use
of the buildings and land equal to 7.5% of appraised value. The rent expense
under this agreement was $216,000 and $166,000 for the six months ended June 30,
2003 and 2002, respectively.

Service companies

      In 1999, Firmamento formed three wholly owned subsidiaries: Satmex
Corporativo, S.de R.L. de C.V., Satmex Administracion, S. de R.L. de C.V. and
Satmex Servicios Tecnicos, S. de R.L. de C.V. In June 1999, Satmex transferred
its management personnel to Satmex Corporativo and its administrative personnel
to Satmex Administracion. In November, 1999, Satmex transferred its union
personnel to Satmex Servicios Tecnicos. None of these three corporations has any
material assets. Satmex pays these companies for the


                                       8
<PAGE>

                        SATELITES MEXICANOS, S.A. DE C.V.
       (A Subsidiary of Servicios Corporativos Satelitales, S.A. de C.V.)

          NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Continued)

actual personnel costs incurred plus a fee. For the six months ended June 30,
2003 and 2002, the fee was $199,000 and $271,000, respectively.

Guarantee arrangements

      In connection with the indenture governing the Company's Senior Secured
Floating Rate Notes due 2004 (the "Senior Secured Notes"), Servicios and
Firmamento have provided and continue to provide guarantees on behalf of the
Company.

6. COMMITMENTS AND CONTINGENCIES

      On January 1, 2002, the Mexican government amended the tax law to broaden
the scope of telecommunications services subject to a 10% tax. The Company
believes, based on discussions with external tax advisors and its internal legal
department, that its services do not fall within the scope of this tax. However,
there is a risk that the tax authorities will not agree with the Company's
interpretation. Satmex has presented its interpretation to the Mexican
government and is awaiting resolution of this matter. If the Mexican government
disagrees with the Company's position, an assessment of the tax and penalty
could have a material adverse effect on the results of operations, cash flows
and financial position of the Company.

      In November 2002, Satmex renewed the in-orbit insurance on Solidaridad 2
through November 2003. The insurance coverage was provided in accordance with
usual and customary practices for the coverage of BS-601 satellites. This
insurance does not insure against an in-orbit failure due to the loss of the
satellite's control processor, the same component that caused the loss of
Solidaridad 1. Additionally, the new terms of insurance increased the percentage
of the satellite's transponder capacity that must be lost for a total loss to be
declared to 75%, from 50%. An uninsured loss of Solidaridad 2 would have a
material effect on the Company's results of operations, financial condition and
cash flows.

      In order to provide expanded satellite services in the United States with
the Satmex 6 satellite, a new coordination agreement is being negotiated between
the governments of Mexico and Canada, as well as the affected satellite
operators. New coordination agreements are often negotiated to accommodate the
operation of new satellites. An existing coordination agreement between the
governments of Mexico and Canada, as well as the affected satellite operators,
provides for the operation of Mexican and Canadian satellites, including Satmex
6, in the 107.3 degrees W.L. to 118.7 degrees W.L. orbital arc. There can be no
assurance that negotiation of a new coordination agreement between the
governments of Mexico and Canada and the affected satellite operators will be
successful. The scheduled launch of Satmex 6 will proceed whether or not a new
coordination agreement has been negotiated. However, the inability to conclude a
satisfactory agreement may negatively impact the Company's ability to provide
expanded services in the United States and could adversely affect Satmex's
business.

      In April 2003, Satmex received confirmation of approval from Compagnie
Francaise d'Assurance pour le Commerce Exterieur, known as Coface, for its loan
insurance program to support 85% of the cost of its launch services for the
Satmex 6 satellite. Also in April, Satmex received confirmation of approval from
the Export-Import Bank of the United States, or Ex-Im Bank, for its loan
guarantee program to support 85% of eligible costs of the Satmex 6 satellite,
insurance, ground equipment and related investments. Each of the Coface and
Ex-Im Bank facilities is subject to negotiation of final documentation. In order
to complete the Ex-Im Bank and Coface financings, Satmex will have to repay,
refinance or restructure its Senior Secured Notes and its Fixed Rate Notes. The
Company has hired a financial advisor to assist it in the restructuring of its
indebtness. In addition, Satmex is considering pursuing various alternatives to
cover the remaining costs of the Satmex 6 satellite project that the Ex-Im Bank
and Coface support does not cover. If the Company is unable to obtain all the
financing arrangements on satisfactory terms, there can be no assurance that the
Company will be able to fulfill its financing strategy or to complete and launch
the Satmex 6 satellite, and the Company's financial condition and results of
operations will be materially adversely affected. Further, if Satmex's
indebtedness is not restructured, Satmex does not expect future cash flows to be
sufficient to make future interest payments on its indebtedness.


                                       9
<PAGE>

                  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      Except for the historical information contained herein, the matters
discussed in the following Operating and Financial Review and Prospects of
Satelites Mexicanos, S.A. de C.V. ("Satmex" or the "Company") are not historical
facts, but are "forward-looking statements," as that term is defined in the
Private Securities Litigation Reform Act of 1995. In addition, the Company or
its representatives have made and may continue to make forward-looking
statements, orally or in writing, in other contexts, such as in reports filed
with the SEC, press releases or statements made with the approval of an
authorized executive officer of the Company. These forward-looking statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "plans", "may", "will", "would", "could", "should", "anticipates",
"estimates", "projects", "intend," or "outlook" or the negative of these words
or other variations of these words or other comparable words, or by discussion
of strategy that involve risks and uncertainties. These forward-looking
statements are only predictions, and actual events or results may differ
materially as a result of a wide variety of factors and conditions, many of
which are beyond the Company's control. Some of these factors and conditions
include: partial or total failure of the Company's in-orbit satellites; the
Company's reliance on certain customers; the Company's operations are located in
Mexico; competition in the Company's industry; and the Company's significant
leverage. For a detailed discussion of these factors and conditions, please
refer to the periodic reports filed by the Company with the SEC. In addition,
the Company operates in an industry sector where securities values may be
volatile and may be influenced by economic and other factors beyond the
Company's control. The Company undertakes no obligation to update any
forward-looking statements.

      The following should be read in conjunction with the unaudited condensed
financial statements of the Company as of and for the six months ended June 30,
2003 and 2002 contained herein, and the audited financial statements and notes
thereto of Satmex as of December 31, 2002 and 2001, and for each of the three
years ended December 31, 2002, included in Satmex's Annual Report on Form 20-F
for the year ended December 31, 2002, which was filed with the SEC on June 30,
2003.

Overview

      Satmex holds concessions from the government of Mexico to operate
satellites in three orbital positions. The Company owns and operates two
geostationary communications satellites, Solidaridad 2 and Satmex 5, in two of
those positions. Satmex also owns and plans to launch a third satellite, Satmex
6, in the fourth quarter of 2003. Satmex's fourth satellite, Morelos 2, is in an
inclined orbit and no longer producing revenue. Satmex operates in the fixed
satellite services segment and is the leading provider of such services in
Mexico and is expanding such services to become a leading provider of fixed
satellite services throughout the Americas. Satmex is also marketing the use of
satellite transmission capacity for new broadband applications, such as
connectivity to the Internet backbone via satellite. The Company has landing
rights to provide broadcasting and telecommunications transmission capacity in
Mexico, the United States, Canada and 37 nations and territories in the Latin
American region.

      On November 17, 1997, Loral and Principia acquired 75% of Satmex's issued
and outstanding stock from the government of Mexico for $647 million through
Firmamento. Loral owns 65% of Firmamento and Principia owns 35%. Loral holds 49%
and Principia holds 51% of Firmamento's voting interests. The remaining 25% of
Satmex's capital stock was retained by the Mexican government.

      On March 12, 1999, Satmex issued 606,730 shares of preferred stock to
Loral and Principia for a total purchase price of approximately $31.9 million.
The preferred stock has limited voting rights and pays a cumulative dividend in
Satmex common stock. The preferred stock can be exchanged at the Company's
option into Satmex common stock, at a ratio of one share of preferred stock for
2.0008 shares of common stock if the exchange occurs before February 2, 2005,
and at a ratio of one share of preferred stock for 4.0016 shares of common stock
on and after February 2, 2005. As of June 30, 2003, Servicios Corporativos
Satelitales, S.A. de C.V., a wholly owned subsidiary of Firmamento, holds 70.71%
of Satmex's outstanding capital stock, Loral holds 4.46%, Principia holds 1.26%
and the Mexican government holds 23.57%.


                                       10
<PAGE>

Recent Trends in the Satellite Industry

      Early in 2001, the telecommunications sector began to suffer a sharp
downturn. Supply increased as a result of a build-out of fiber optics capacity
around the world. At the same time, demand was reduced via compression
technology that allows more efficient utilization of telecommunications
capacity. Also in 2001, the Internet sector, one of the primary growth drivers
for satellite services, also suffered a downturn from which it has not yet
recovered. The worldwide business climate began to slow down and Latin America,
because of its more volatile economies, has suffered to a greater extent.

      This industry downturn affected both satellite operators and their
customer base. As of 1999, voice customers began to switch to fiber optic cable,
where available. Using new technology, some existing customers have been able to
compress data to a greater extent, requiring less satellite capacity to send
their signals. With the decline of the Internet sector, many businesses that
were users of satellite capacity failed and the pick-up of broadband/data
services has been slower than expected. In summary, many anticipated projects
have been postponed, some customers have been forced to cancel their satellite
service contracts, and the development of new business has been slower than
expected. From April 2001 to March 2003, contract cancellations decreased
Satmex's backlog by $169.3 million.

      At the same time, satellites themselves have been increasing in size,
capacity, power levels and the surface of the earth to which their signals can
reach. The use of compressed data has increased capacity of satellites to offer
more data. The result has been lower utilization rates across the fixed
satellite services industry. In addition, prices of fixed satellite services
have decreased over the last two years.

      During this period, in part because Latin America is recognized as a
market with long-term growth potential, competition has increased in Satmex's
market. On August 10, 2001, the Mexican government granted licenses to provide
satellite service in Mexico to PanAmSat, SES Global, Televisa and Enlaces
Integra. A total of 18 satellites were registered to provide satellite service
in Mexico.

      Due, however, to lower pricing as well as early economic recovery, the
Company is beginning to see new demand for fixed satellite services.
Technological advances, such as high definition television, are working in
Satmex's favor because this service requires more bandwidth than regular
television. In addition, the requirement that subscription television (cable and
satellite direct to home) offer local channels (local-into-local) will entail
greater demand for satellite services. Rising demand for national and foreign
channels has also begun to stimulate demand for satellite capacity. For example,
demand in the United States for Spanish language programming is rising rapidly
as is demand in Latin America for U.S. channels. Satmex is seeking to enter the
market for Spanish language programming by working with Latin American
programmers in an effort to create demand for its satellite services.

Satellite Operations

      In August 2000, Satmex's Solidaridad 1 satellite ceased operating and was
considered irretrievably lost. The loss was caused by the failure of the back-up
control processor on board the satellite. Solidaridad 1, which was built by
Hughes Space and Communications and commenced service in January 1994,
experienced a failure of its primary control processor in April 1999, and the
satellite had been operating on its back-up processor since that time.
Solidaridad 1 was insured for $250 million. At the date of the loss, Solidaridad
1 had a net book value of approximately $109.6 million. After deducting prepaid
insurance of $1.6 million, the unpaid insurance premiums of $12.5 million and
on-going monitoring costs and the excess of the estimated cost over revenue for
the currently committed transponder capacity to be provided to customers of
$23.2 million, the net gain on the in-orbit failure of Solidaridad 1 was
approximately $103.1 million. In January 2001, Satmex received insurance
proceeds of approximately $235.3 million, net of the unpaid insurance premiums
and related value added tax.

      Satmex used the net insurance proceeds towards the construction, launch
and insurance of a replacement satellite, Satmex 6, as well as for debt service.
Satmex 6 was designed to provide broader coverage and higher power levels than
any other satellite currently in the Satmex fleet. Satmex contracted with Space
Systems/Loral, Inc., a wholly owned subsidiary of Loral, to build Satmex 6.
Certain


                                       11
<PAGE>

manufacturing and testing procedures have resulted in the launch of Satmex 6
being extended to the latter part of 2003.

      As a result of schedule delays, Satmex and Space Systems/Loral have agreed
that Satmex 6 will be delivered in 2003. Under the original contract, Satmex
earned certain liquidated damages as a result of the delay. An amendment to the
contract was subsequently executed, which, among other things, transferred title
of the satellite to Satmex, waived the liquidated damages in exchange for a like
amount of other benefits that include additional work required on the satellite
and reduced future orbital incentive payments due to Space Systems/Loral. In
addition, Satmex and Loral separately agreed to waive the intellectual property
fees for a two year period, and Satmex, Loral and Principia agreed to waive the
management fees for a two year period.

      In April 2001, Satmex 5 experienced temporary difficulties starting the
back-up propulsion system of the Xenon Ion Propulsion System ("XIPS"), which
provides station-keeping capability for the satellite. Using procedures provided
by the satellite manufacturer, we were able to start the back-up propulsion
subsystem, and at no time was service on Satmex 5 interrupted. Failures related
to XIPS have occurred on other BS 601 HP spacecraft. Performance on both Satmex
5 XIPS systems is normal. Currently, however, we are using the second XIPS
system as the primary propulsion system and the first system as the back up. In
addition, Satmex 5 has a chemical propulsion system in place to provide further
redundancy.

      At June 30, 2002, Satmex's Solidaridad 2 and Satmex 5 were operating
normally and had remaining estimated useful lives of 6.3 and 11 years,
respectively.

      Results of Operations for the Three Months Ended June 30, 2003 compared to
June 30, 2002

Revenue

      Revenue for the second quarter of 2003 decreased $1.0 million to $19.4
million, as compared to $20.4 million for the second quarter of 2002.

      During 2001, 2002 and the first half of 2003, the Company experienced
significant terminations, and was unable to renew contracts with certain
customers upon expiration. During the second quarter of 2003, approximately 21
customers accounted for approximately 80% of Satmex's current revenue base.
Cancellation or non-renewal of service contracts by some of these customers
would have an adverse effect on the Company's results of operations.

Operating expenses

      Operating expenses were $20.7 million for the second quarter of 2003
versus $21.1 million in the second quarter of 2002, as described below.

      Satellite operations. Satellite operations costs, which consist primarily
of satellite insurance and the personnel costs related to the operation of the
satellites, were $3.4 million for the second quarter of 2003, as compared to
$4.7 million in the second quarter of 2002, a decrease of $1.3 million. The
decrease is due to a lower cost of $1.2 million for replacement capacity on
third party satellites for customers previously on Solidaridad 1, as the Company
has migrated its customers to its own fleet.

      Selling and administrative expenses. Selling and administrative expenses
in the second quarter of 2003 were $5.1 million as compared to $4.3 million in
the second quarter of 2002, an increase of $0.8 million. The increase is due to
an increase of $0.4 million of advisory expenses and $0.4 million of provision
for uncollectible accounts.

      License and management fees. Loral and Principia are responsible for
managing the Company. Loral and Principia receive a management fee, based on a
sliding scale, up to a maximum of 3.75% of the Company's quarterly gross
revenue, as defined. For the six months ended June 30, 2003 and 2002, no
management fee was due. Loral has licensed certain intellectual property to the
Company for an annual fee of 1.5% of the Company's gross revenue, as defined.
For the six months ended June 30, 2003 and 2002, the


                                       12
<PAGE>

fee was $280,000 and $292,000, respectively, of which $6,000 and $21,000,
respectively, was offset against Solidaridad 1 estimated cost over revenue for
the currently committed transponder capacity to be provided to customers. Loral
and Principia have waived the management fee and Loral has waived the license
fee for the two years subsequent to the closings of the financings for the
completion, launch and insurance of Satmex 6, provided such financings close by
October 31, 2003.

      Depreciation and amortization. Depreciation expense for the second quarter
of 2003 was $8.8 million as compared to $8.6 million during the second quarter
of 2002. Amortization expense relating to the concessions was $3.2 million in
each quarter.

Interest income

      Interest income for the second quarter of 2003 was $80,000 as compared to
$645,000 for the second quarter of 2002. The decrease is due to lower levels of
restricted and segregated cash available for investment, as well as lower
interest rates.

Interest cost

      Total interest cost was $12.4 million in the second quarter of 2003 as
compared to $13.3 million in the second quarter of 2002. Total interest cost
includes capitalized interest related to the construction of Satmex 6, which
amounted to $4.6 million for the second quarter of 2003 and $3.4 million for the
second quarter of 2002. Total interest cost decreased due to lower average
outstanding debt in the second quarter of 2003 and lower interest rates on the
Company's variable rate debt.

Net foreign exchange gain

      The Company recorded a net foreign exchange gain of $55,000 in the second
quarter of 2003 and $30,000 in the second quarter of 2002.

Deferred income tax benefit

      On January 1, 2002, the Mexican government enacted a new income tax law
that reduces the 35% statutory income tax rate by 1% per year beginning January
1, 2003 through January 1, 2005. The Company recorded a deferred income tax
benefit of $1.8 million in 2003 for the effect of this change on its deferred
tax assets and liabilities.

      For the three months ended June 30, 2003, the Company recorded a deferred
income tax benefit of $1.8 million on a loss before income taxes of $9.0 million
as compared to a deferred income tax benefit of $8.0 million, excluding the
deferred income tax benefit of $1.8 million relating to the change in the
statutory rate, on a loss before income taxes of $9.9 million for the three
months ended June 30, 2002. The provision for income taxes for the three months
ended June 30, 2003 and 2002, differ from the statutory tax rate of 34% and 35%
respectively due to inflationary components and remeasurement.

Preferred stock dividend requirement

      The preferred stock dividend requirement was $377,000 in each quarter.

Results of Operations for the Six Months Ended June 30, 2003 compared to June
30, 2002

Revenue

      Revenue for the first six months of 2003 decreased $2.8 million to $40.2
million, as compared to $43.0 million for the first six months of 2002. This
decrease was primarily the result of the expiry of the Company's contract with
Innova on March 31, 2002, which represented $1.5 million of revenue for the
first quarter of 2002.


                                       13
<PAGE>

      During 2001, 2002 and the first six months of 2003, the Company
experienced significant customer terminations, and was unable to renew contracts
with certain customers upon expiration. During the first six months of 2003,
approximately 25 customers accounted for approximately 80% of Satmex's current
revenue base. Cancellation or non-renewal of service contracts by some of these
customers would have an adverse effect on the Company's results of operations.

Operating expenses

      Operating expenses were $42.3 million for the first six months of 2003
versus $42.5 million for the first six months of 2002, as described below.

      Satellite operations. Satellite operations costs, which consist primarily
of satellite insurance and the personnel costs related to the operation of the
satellites, were $7.0 million for the first six months of 2003, as compared to
$9.6 million in the first six months of 2002, a decrease of $2.6 million. The
decrease is largely due to a $2.3 million cost reduction for replacement
capacity on third party satellites for customers previously on Solidaridad 1, as
the Company has migrated its customers to its own fleet.

      Selling and administrative expenses. Selling and administrative expenses
in the first six months of 2003 were $10.8 million as compared to $8.7 million
in the first six months of 2002, an increase of $2.1 million. The increase is
due to severance expense of $0.5 million related to personnel reductions, $0.7
million as a provision for future personnel benefits, and higher advisory
expenses of $0.9 million.

      License and management fees. Loral and Principia are responsible for
managing the Company. Loral and Principia receive a management fee, based on a
sliding scale, up to a maximum of 3.75% of the Company's quarterly gross
revenue, as defined. For the six months ended June 30, 2003 and 2002, no
management fee was due. Loral has licensed certain intellectual property to the
Company for an annual fee of 1.5% of the Company's gross revenue, as defined.
For the six months ended June 30, 2003 and 2002, the fee was $583,000 and
$620,000, respectively, of which $15,000 and $46,000, respectively, was offset
against Solidaridad 1 estimated cost over revenue for the currently committed
transponder capacity to be provided to customers. Loral and Principia have
waived the management fee and Loral has waived the license fee for the two years
subsequent to the closings of the Satmex 6 financings, provided such financings
close by October 31, 2003.

      Depreciation and amortization. Depreciation expense for the first six
months of 2003 was $17.4 million as compared to $17.2 million during the first
six months of 2002. Amortization expense relating to the concessions was $6.5
million in each period.

Interest income

      Interest income for the first six months of 2003 was $157,000 as compared
to $1.6 million for the first six months of 2002. The decrease is due to lower
levels of restricted and segregated cash available for investment, as well as
lower interest rates.

Interest cost

      Total interest cost was $24.7 million in the first six months of 2003 as
compared to $26.4 million in the first six months of 2002. Total interest cost
includes capitalized interest related to the construction of Satmex 6, which
amounted to $9.1 million for the first six month of 2003 and $5.6 million for
the first six months of 2002. Total interest cost decreased due to lower average
outstanding debt in the first six months of 2003 and lower interest rates on the
Company's variable rate debt.

Net foreign exchange gain

      The Company recorded a net foreign exchange gain of $119,000 in the first
six months of 2003 and $6,000 in the first six months of 2002.


                                       14
<PAGE>

Deferred income tax benefit

      On January 1, 2002, the Mexican government enacted a new income tax law
that reduces the 35% statutory income tax rate by 1% per year beginning January
1, 2003 through January 1, 2005. The Company recorded a deferred income tax
benefit of $1.8 million in 2003 for the effect of this change on its deferred
tax assets and liabilities.

      For the six months ended June 30, 2003, the Company recorded a deferred
income tax benefit of $3.5 million on a loss before income taxes of $17.4
million as compared to a deferred income tax benefit of $9.2 million, excluding
the deferred income tax benefit of $1.8 million relating to the change in the
statutory rate, on a loss before income taxes of $18.7 million for the six
months ended June 30, 2002. The provision for income taxes for the six months
ended June 30, 2003 and 2002, differ from the statutory tax rate of 34% and 35%
respectively due to inflationary components and remeasurement.

Preferred stock dividend requirement

      The preferred stock dividend requirement was $754,000 in each period.

Liquidity and Capital Resources

      At June 30, 2003, the Company had total debt of $523.9 million and
management believes the Company was then in compliance with all covenants
governing its debt agreements. However, the Company did not make the $16.2
million interest payment due its Fixed Rate Notes as scheduled on August 1,
2003. According to the terms of the indenture governing the Fixed Rate Notes,
the Company has 30 days from August 1 to make the payment in order to avoid an
Event of Default as defined in the indenture.

      The Company's primary source of liquidity for working capital purposes is
cash flow from operations. As of June 30, 2003, Satmex had $17.0 million in
available cash and cash equivalents. Funds from the satellite and debt escrow
accounts had been fully used and, as of June 30, 2003, no remaining balances
existed. The Company believes that available cash will not be sufficient to fund
the in orbit delivery of the Satmex 6 satellite unless the Company obtains other
financing or negotiates satisfactory payment terms for delivery of Satmex 6
in-orbit.

      In April 2003, Satmex received confirmation of approval from Compagnie
Francaise d'Assurance pour le Commerce Exterieur, known as Coface, for its loan
insurance program to support 85% of the cost of its launch services for the
Satmex 6 satellite. Also in April, Satmex received confirmation of approval from
the Export-Import Bank of the United States, or Ex-Im Bank, for its loan
guarantee program to support 85% of eligible costs of the Satmex 6 satellite,
insurance, ground equipment and related investments. Each of the Coface and
Ex-Im Bank facilities is subject to negotiation of final documentation. In order
to complete the Ex-Im Bank and Coface financings, Satmex will have to repay,
refinance or restructure its Senior Secured Notes and its Fixed Rate Notes. The
Company has hired a financial advisor to assist it in the restructuring of its
indebtness. In addition, Satmex is considering pursuing various alternatives to
cover the remaining costs of the Satmex 6 satellite project that the Ex-Im Bank
and Coface support does not cover. If the Company is unable to obtain all the
financing arrangements on satisfactory terms, there can be no assurance that the
Company will be able to fulfill its financing strategy or to complete and launch
the Satmex 6 satellite, and the Company's financial condition and results of
operations will be materially adversely affected. Further, if Satmex's
indebtedness is not restructured, Satmex does not expect future cash flows to be
sufficient to make future interest and principal payments on its indebtedness.

      On March 18, 2003, holders of Satmex's Senior Secured Notes agreed to
modify certain financial covenants required by the Senior Secured Notes
indenture and Satmex agreed to pay the consenting holders a fee of 0.25% of the
amount of the debt. This fee was paid on March 20, 2003, solely to the holders
that gave consent. The total fee paid was $495,000. The modification of the
financial covenants consisted of substituting certain financial ratios for a
minimum level of cash flow to be maintained during the remaining life of the
Senior Secured Notes. In addition, a new covenant was incorporated to require
that the Ex-Im Bank and Coface financings be closed on or prior to September 30,
2003.


                                       15
<PAGE>

Cash used and provided

      Net cash provided by operating activities for the six months ended June
30, 2003 was $6.8 million.

      Cash used in investing activities in the first six months of 2003 was
$16.2 million. Capital expenditures for the first six months of 2003 were $22.8
million, which included $22.5 for the construction of Satmex 6. In the first six
months of 2003, $6.6 million of the expenditures for Satmex 6 was funded from
restricted and segregated cash. Substantially all capital expenditures are
denominated in U.S. dollars.

      Cash used in financing activities for the first six months of 2003 was
$0.5 million for the repayment of principal of the Senior Secured Notes.

      Contractual Obligations and Other Commercial Commitments

The Fixed Rate Notes

      On February 2, 1998, Satmex issued the Fixed Rate Notes in an aggregate
principal amount of $320 million, all of which was outstanding on June 30, 2003.
The interest rate on the Fixed Rate Notes is 10.125%. Satmex is required to make
interest payments on the Fixed Rate Notes semi-annually in cash in arrears on
each February 1 and August 1 until maturity. Satmex did not make the interest
payment due of US$16.2 million on the Fixed Rate Notes as scheduled on August 1,
2003. According to the terms of the indenture governing the Fixed Rate Notes,
Satmex has 30 days from August 1 to make the payment in order to avoid an Event
of Default as defined in the indenture.

      The Fixed Rate Notes mature on November 1, 2004 and are unsecured,
unsubordinated obligations, rank pari passu in right of payment with all of the
Company's existing and future unsecured, unsubordinated obligations, and are
senior in right of payment to all of the Company's future subordinated
indebtedness.

      The Fixed Rate Notes indenture contains certain covenants that impose
certain limitations and restrictions on Satmex's ability to incur additional
indebtedness, pay dividends or make other distributions, make certain loans and
investments, apply the proceeds of asset sales (and use the proceeds thereof),
create liens, enter into certain transactions with affiliates, merge,
consolidate or transfer substantially all of our assets and make investments in
unrestricted subsidiaries. The events of default under the Fixed Rate Notes
indenture includes various events of default customary for similar issues of
notes, including the failure to pay principal and interest when due, cross
acceleration and certain events of bankruptcy, insolvency and reorganization.

The Senior Secured Notes

      On March 2, 1998, Satmex issued $325 million of senior secured Senior
Secured Notes due June 30, 2004. The Senior Secured Notes rank senior in right
of payment to all of the Company's subordinated debt and pari passu in right of
payment to all of the Company's senior indebtedness, including the existing
notes. They are secured by a lien on substantially all of Satmex's assets and
the shares held by Servicios in the Company and by Firmamento in Servicios. The
Senior Secured Notes bear interest at rates based either on LIBOR or the base
rate specified in the Senior Secured Notes indenture, at our option, and are
redeemable at Satmex's option. In addition, the Senior Secured Notes are
guaranteed by Firmamento and Servicios.

      In addition to containing similar covenants as the Fixed Rate Notes, the
Senior Secured Notes contain covenants that require maintenance of certain
quarterly financial and operating ratio levels and impose limits on our spending
for capital expenditures. At June 30, 2003, we were in compliance with all
covenants in the Senior Secured Note indenture.

      We are required to make quarterly redemption payments on the Senior
Secured Notes of $250,000 through March 31, 2004, plus additional prepayments
from excess cash flow, as defined in the Senior Secured Note indenture, with the
balance due on June 29, 2004.


                                       16
<PAGE>

      At December 31, 2001, a technical default existed with respect to the
Senior Secured Notes due to Satmex's failure to make a principal prepayment from
excess cash flow for the year ended December 31, 2000, as defined under the
Senior Secured Note indenture. On April 23, 2002, Satmex made the required
principal prepayment of $11.9 million, plus accrued interest of $228,000, as
well as a principal prepayment for 2001 excess cash flow of $749,000. Satmex
believes that the payment on April 23, 2002, cured the technical default on the
Senior Secured Notes. At December 31, 2001, Satmex classified $12.6 million,
representing the 2001 and 2000 principal repayments, as current portion of
long-term debt.

      In February 2000, the Senior Secured Notes were amended to permit the
modification of certain covenants, in exchange for the payment of a fee and an
increase in the applicable interest margin by up to 0.75%. On March 18, 2003,
holders of the Senior Secured Notes agreed to modify certain financial covenants
required by the Senior Secured Note indenture and Satmex agreed to pay the
consenting holders a fee of 0.25% of the amount of the debt. This fee was paid
on March 21, 2003, solely to the holders that gave consent. The total fee paid
was $495,000. The modification of the financial covenants consisted of
substituting certain financial ratios for a minimum level of cash flow to be
maintained during the remaining life of the Senior Secured Notes. In addition, a
new covenant was incorporated to require that the loans backed by Ex-Im Bank and
Coface be closed on or prior to September 30, 2003.

      Satmex plans to prepay the entire principal amount of the Senior Secured
Notes upon completion of the financings for the construction, insurance and
launch of Satmex 6 and the restructuring of our Fixed Rate Notes.

Our Credit Rating

      On November 1, 2002, Moody's Investor Services lowered its ratings of
Satmex's senior unsecured indebtedness from "B3" to "Ca." A "B3" rating is the
sixth lowest rating category out of 21 used by Moody's. A "B" rating describes
obligations that Moody's believes generally lack characteristics of a desirable
investment where there is little assurance that interest and principal payments
will be made or of maintenance of other terms will be kept over a long period of
time. "Ca" is the second lowest rating category out of 21 and describes
obligations that Moody's believes are speculative in a high degree and that are
often in default or have other marked shortcomings.

      On September 23, 2002 Standard & Poor's lowered Satmex's long term foreign
issuer credit rating from "B" to "CCC+." A "B" rating is the eighth lowest
rating category out of 22 used by S&P and a "CCC+" rating is the sixth lowest
rating out of 22. A "B" rating describes an obligation that S&P believes is more
vulnerable to nonpayment than obligations rated "BB," but where the obligor has
the capacity to meet its financial commitment on the obligation at that time.
S&P believes that adverse business, financial, or economic conditions will
likely impair the "B" rated obligor's capacity or willingness to meet its
financial commitments. A "CCC+" rating describes an obligation that S&P believes
is currently vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, S&P believes that a "CCC" rated obligor is not likely to
have the capacity to meet its financial commitment on the obligation.

      As a result of these negative credit ratings and downgrades, Satmex's
sources of short-term financing have become limited, which impedes the Company's
ability to finance operations. Furthermore, the negative publicity surrounding
these recent downgrades has generated concern among certain of the Company's
existing customers.

Other Matters

      Insurance Costs

      Satmex, like others in the satellite industry, is faced with significantly
higher premiums for launch and in-orbit insurance and significantly shorter
coverage periods than those that have been available in the past, which is due
in part to the events of September 11, 2001, and in part to recent losses in the
satellite industry, including that of Solidaridad 1. This development in the
insurance industry will increase the


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<PAGE>

Company's cost of doing business. Satmex intends to pass on such increased cost
to its customers. There is no assurance, however, that the Company will be able
to do so. Insurance market conditions have historically been cyclical in nature.
While Satmex anticipates that these conditions will improve in the future, there
can be no assurance that they will.

      Satmex is in the process of obtaining launch insurance for Satmex 6. Prior
to launch, the Company intends to insure Satmex 6 for $300 million against
failure during launch or its first year in orbit. Satmex is currently
negotiating the appropriate documentation and anticipates no exclusions other
than as customary.

Related Party Transactions

      See Footnote 5 - Balances and Transactions with Related Parties in the
notes to unaudited condensed financial statements for a discussion of related
party transactions.

Accounting Pronouncements

      In April 2002, the FASB issued Statement No. 145, Recission of FASB
Statement No. 4, 44, and 64, Amendment FASB No. 13 and Technical Corrections
("SFAS 145"). SFAS 145 generally requires that any gains or losses on
extinguishment of debt in current or prior periods be classified as other income
(expense) beginning in fiscal 2003, with early adoption encouraged. This SFAS
No. 145 has not had a material effect on the financial statements of the
Company.

      In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure - an amendment to FASB Statement No. 123," ("SFAS No. 148"). SFAS No.
148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The transition guidance and annual disclosure
provisions of SFAS No. 148 are effective for financial statements issued for
fiscal years ending after December 15, 2002. The interim disclosure provisions
are effective for financial reports containing financial statements for interim
periods beginning after December 15, 2002. This SFAS No. 148 has no effect in
the financial statements of the Company.

      In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS
150). SFAS 150 addresses the accounting for certain financial instruments that
issuers could previously account for as equity. SFAS 150 affects three types of
financial instruments: mandatorily redeemable shares; instruments that do or may
require the issuer to buy back some of its shares in exchange for cash or other
assets; and obligations that can be settled with shares, the monetary value of
which is fixed, tied solely or predominantly to a variable such as a market
index, or varies inversely with the value of the issuer's shares. SFAS 150 does
not apply to features imbedded in a financial instrument that is not a
derivative in its entirety. The Company was required to adopt aspects of SFAS
150 beginning on May 31, 2003. The adoption of SFAS 150 had no effect on the
financial statements of the Company.


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                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                               SATELITES MEXICANOS, S.A. de C.V.

                                               By: Cynthia Pelini
                                                  ------------------------------
                                               Cynthia Pelini
                                               Chief Financial Officer
                                               Date: August 5, 2003


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