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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**FORM 10-K**

 

**
 
**

**(Mark One)**

**For the fiscal year ended December 31, 2010**

**OR**

 

**For the transition period from            to            **

**Commission file number 000-50262**

 

**
 
**

**INTELSAT S.A.**

**(Exact name of registrant as specified in its charter)**

 

**
 
**

 

**+35227-84-1600**

**(Registrant’s Telephone Number, Including Area Code)**

**Securities registered pursuant to Section 12(b) of the Act: None**

**Securities registered pursuant to Section 12(g) of the Act: None**

 

**
 
**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of theAct.    Yes  x    No   ̈

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days.    Yes   ̈    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.(Check one): 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).    Yes   ̈    No  x

The aggregate market value of the registrant’s voting stock held by non-affiliates is zero. The registrant is a privately heldcorporation. 

As of March 7, 2011, 5,000,000 common shares, par value $1.00 per share, were outstanding. 

**Documents incorporated by reference:**

None 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
   **Page** 
Forward-Looking Statements 
   1  
**Part I**
    
Item 1.
  Business   3  
Item 1A.
  Risk Factors   31  
Item 1B.
  Unresolved Staff Comments   42  
Item 2.
  Properties   42  
Item 3.
  Legal Proceedings   44  
Item 4.
  (Removed and Reserved)   44  
**Part II**
    
Item 5.
  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   45  
Item 6.
  Selected Financial Data   45  
Item 7.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations   47  
Item 7A.
  Quantitative and Qualitative Disclosures About Market Risk   86  
Item 8.
  Financial Statements and Supplementary Data   87  
Item 9.
  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   87  
Item 9A.
  Controls and Procedures   87  
Item 9B.
  Other Information   87  
**Part III**
    
Item 10.
  Directors, Executive Officers and Corporate Governance   88  
Item 11.
  Executive Compensation   91  
Item 12.
  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   110  
Item 13.
  Certain Relationships and Related Transactions, and Director Independence   112  
Item 14.
  Principal Accountant Fees and Services   113  
**Part IV**
    
Item 15.
  Exhibits and Financial Statement Schedules   114    Signatures   115    Index to Exhibits    Index to Consolidated Financial Statements   F-1  
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**FORWARD-LOOKING STATEMENTS**

Some of the statements in this Annual Report on Form 10-K, or Annual Report, constitute forward-looking statements that do not directlyor exclusively relate to historical facts. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements as long as they are identified as forward-looking and are accompanied bymeaningful cautionary statements identifying important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements. 

When used in this Annual Report, the words “may,” “will,” “ might,” “should,” “expect,”“plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “outlook” and “continue,” and the negative of these terms,and other similar expressions are intended to identify forward-looking statements and information. Examples of these forward-looking statements include, but are not limited to, statements regarding the following: our goal to expand our leading fixedsatellite services (“FSS”) business in high growth regions and applications while maintaining our focus on operational discipline; our expectation that our current capital expenditure program will position our network to capitalize on theFSS sector’s best growth opportunities globally, while providing optimal coverage to meet needs across our targeted customer sets; the characteristics of our refreshed fleet when the current investment cycle is completed; our belief that ourstrategies will position us to continue to deliver high operating margins, and as our current fleet investment program is completed, strong cash flow generation; the trends we believe will increase demand for satellite services and that we believewill allow us to capture new business opportunities in the future; our intent to continue to evaluate and pursue strategic transactions that complement our global fleet, provide growth capacity and allow us to respond to our customer needs; ourbelief that our network services and media customers increasingly require managed services best addressed by a network that combines space and terrestrial infrastructure; our expectation that the FSS sector will experience moderate growth over thenext few years; our expectation that we will benefit from the general trend towards Internet Protocol (“IP”) based networking and distribution, including growing use of new media formats, as well as infrastructure applications in emergingregions; our expectation that we will continue to implement compression technologies into our ground network to reduce the bandwidth necessary for network service applications, increasing our customers’ efficiency and expanding our marketpotential, particularly in emerging regions; our belief that our enhancement of our fully-integrated terrestrial network to an all IP network environment will improve our ground support of high bandwidth applications such as high definition videoand will allow us to converge our media and network services terrestrial network infrastructures; the trends that we believe will impact our revenue and operating expenses in the future; our assessments regarding how long satellites that haveexperienced anomalies in the past should be able to provide service on their transponders; our assessment of the risk of additional anomalies occurring on our satellites; our expectation that certain anomalies will not result in the acceleration ofcapital expenditures; our plans for satellite launches in the near term; our expected capital expenditures in 2011 and during the next several years; our belief that the diversity of our revenue and customer base allows us to recognize trends,capture new growth opportunities, and gain experience that can be transferred to customers in other regions, enables us to capitalize on changing market conditions and mitigates the impact of fluctuations in any specific customer type or geographicregion; our belief that our global scale, diversity, collection of spectrum rights, technical expertise and fully integrated hybrid network form a strategic platform that positions us to identify and capitalize on new opportunities in satelliteservices; our belief that the scale of our fleet can reduce the financial impact of any satellite failures and protect against service interruption; and the impact on our financial position or results of operations of pending legal proceedings.

The forward-looking statements made in this Annual Report reflect our intentions, plans, expectations, assumptions andbeliefs about future events. These forward-looking statements speak only as of their dates and are not guarantees of future performance or results and are subject to risks, uncertainties and other factors, many of which are outside of our control.These factors could cause actual results or developments to differ materially from the expectations expressed or implied in the forward-looking statements and include known and unknown risks. Known risks include, among others, the risks discussed inItem 1A—Risk Factors, the political, economic and legal conditions in the markets we are targeting for communications services or in which we operate and 

 
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other risks and uncertainties inherent in the telecommunications business in general and the satellite communications business in particular. 

Other factors that may cause results or developments to differ materially from the forward-looking statements made in this Annual Reportinclude, but are not limited to: 

 
 • 
risks associated with operating our in-orbit satellites; 

 
 • 
satellite launch failures, satellite launch and construction delays and in-orbit failures or reduced performance; 

 
 • 
potential changes in the number of companies offering commercial satellite launch services and the number of commercial satellite launch opportunitiesavailable in any given time period that could impact our ability to timely schedule future launches and the prices we pay for such launches; 

 
 • 
our ability to obtain new satellite insurance policies with financially viable insurance carriers on commercially reasonable terms or at all, as wellas the ability of our insurance carriers to fulfill their obligations; 

 
 • 
possible future losses on satellites that are not adequately covered by insurance; 

 
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domestic and international government regulation; 

 
 • 
changes in our revenue backlog or expected revenue backlog for future services; 

 
 • 
pricing pressure and overcapacity in the markets in which we compete; 

 
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inadequate access to capital markets; 

 
 • 
the competitive environment in which we operate; 

 
 • 
customer defaults on their obligations to us; 

 
 • 
our international operations and other uncertainties associated with doing business internationally; 

 
 • 
litigation; and 

 
 • 
other risks discussed under Item 1A—Risk Factors. 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, level of activity, performance or achievements. Because actualresults could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future, you are urged not to rely on forward-looking statements in this Annual Report and to view all forward-looking statements made in thisAnnual Report with caution. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 

 
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**PART I**

 
**Item 1.****Business**
*In thisAnnual Report unless otherwise indicated or the context otherwise requires, (1) the terms “we,” “us,” “our,” “the Company” and “Intelsat” refer to Intelsat S.A. and its subsidiaries on aconsolidated basis, (2) the terms “Serafina Holdings” and “Intelsat Global” refer to Intelsat Global S.A. (formerly known as Serafina Holdings Limited), (3) the terms “Serafina” and “Intelsat GlobalSubsidiary” refer to Intelsat Global Subsidiary S.A. (formerly known as Serafina Acquisition Limited), (4) the term “Intelsat Holdings” refers to our parent, Intelsat Holdings S.A., (5) the term “IntelsatLuxembourg” refers to Intelsat (Luxembourg) S.A., Intelsat S.A.’s direct wholly-owned subsidiary, (6) the term “Intelsat Jackson” refers to Intelsat Jackson Holdings S.A., Intelsat (Luxembourg) S.A.’s directwholly-owned subsidiary, (7) the term “Intermediate Holdco” refers to Intelsat Intermediate Holding Company S.A., Intelsat Jackson’s direct wholly-owned subsidiary, (8) the term “Intelsat Sub Holdco” refers toIntelsat Subsidiary Holding Company S.A., Intermediate Holdco’s indirect wholly-owned subsidiary, and (9) the term “New Sponsors Acquisition Transactions” refers to the acquisition of Intelsat Holdings by Serafina onFebruary 4, 2008 and related transactions. We refer to Intelsat General Corporation, our government business subsidiary, as “Intelsat General.” In this Annual Report, unless the context otherwise requires, all references totransponder capacity or demand refer to transponder capacity or demand in the C-band and Ku-band only.*

**Overview**

Intelsat operates the world’s largest fixed satellite services (“FSS”) business, providing a critical layer in the globalcommunications infrastructure. Based on the scale and global coverage of our network, our extensive customer relationships and our reputation for highly reliable services, we believe that we are the leading FSS company in the world. We operate moresatellite capacity in orbit, have more satellite capacity under contract, serve more commercial customers and deliver services in more countries than any other commercial satellite operator. 

Our business provides mission critical communication services to the world’s leading media companies, wireline and wirelesstelecommunications operators, data networking service providers, multinational corporations, and Internet service providers (“ISPs”). We are the leading provider of commercial satellite capacity to the U.S. government and other selectmilitary organizations and contractors. The span of our business ranges from global distribution of content for media companies to essential network backbones for communications providers in high-growth emerging markets. 

Our business is the most diversified in the FSS sector based on types of service offerings, number of customers and revenue concentrationby satellite and geography. This diversity reduces our market and operating risk. Our broad customer base and geographic presence also provide us with early opportunities to support new communications applications in a converging world. 

Our satellite-based solutions are a critical component of our customers’ infrastructures. Generally, our customers need theconnectivity that satellites provide so long as they are in business or pursuing their mission. This gives us stability during economic downturns. Our services also provide strong value in support of our customers’ businesses. For instance, formedia applications, our satellite services provide efficient broadcast distribution that is difficult for terrestrial services to match. For network services applications, our satellite solutions provide higher reliability than is available fromlocal terrestrial services, and allow our customers to reach geographies that they would otherwise be unable to serve. The Intelsat network supports: 

 
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The distribution of television entertainment and news programming; 

 
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The expansion of wireless networks in emerging regions without adequate infrastructure; 

 
 • 
Ubiquitous access to broadband for Internet and fixed and mobile networks used by corporations and other organizations; 

 
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Completion and extension of international, national and regional voice and data networks; and 

 
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Highly specialized fixed and mobile military applications, such as secure communications networks and bandwidth to enable manned and unmanned aerialvehicle missions. 

We provide our infrastructure services on a satellite fleet comprisedof over 50 satellites, covering 99% of the earth’s populated regions. Our satellite capacity is complemented by IntelsatONESM, our terrestrial network comprised of leased fiber optic cable and owned and operated teleports. We believe that ourhybrid satellite-terrestrial network provides significant differentiation and is an important element of our growth strategy. 

We have a reputation for operational and engineering leadership, built on our experience of over 45 years in the FSS sector. Thereliability of our network is outstanding, delivering 99.998% network availability on station-kept satellites to our customers in 2010. We built our centrally operated, fully integrated network using the world’s largest collection of FSSspectrum rights at valuable orbital locations, from which we can deliver services to established regions as well as higher-growth emerging regions. 

We operate in an attractive, well-developed sector of the satellite communications industry, which is benefiting from increasing demand for capacity from the commercial sector and governments. The FSSsector is characterized by steady and predictable contracted revenue streams, high operating margins, strong cash flows and long-term contractual commitments. We believe these sector characteristics, coupled with our cost-efficient, fully integratedoperating structure and favorable tax profile, provide us with an attractive business model. 

As of December 31, 2010,our revenue backlog, which is our expected future revenue under existing customer contracts, was approximately $9.8 billion. We typically contract with our customers for long-term commitments of up to 15 years. Approximately 95% of this backlogrelates to contracts that are non-cancelable or cancelable only upon payment of substantial termination fees. For the year ended December 31, 2010, we generated revenue of $2.5 billion, a growth rate of 1% over the year ended December 31,2009. 

We believe that our global scale and efficient operating profile, diversified customer sets and sizeable backlog,together with the growing worldwide demand for entertainment and connectivity, provide us with a platform for success. 

**The FSS Sector**

Fixed satellite services are an integral part of the global communications infrastructure. The global FSS sector isexpected to generate revenues of approximately $10.3 billion in 2011 according to NSR, a leading international market research and consulting firm specializing in satellite and wireless technology and applications. 

Our customers use our services because of the distinct technical and economic benefits that satellite services provide for certaincritical applications. Satellites provide a number of advantages over terrestrial communications systems, including the following: 

 
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Satellite beams effectively blanket service regions with bandwidth, enabling any user within a coverage area to have equal access to highly reliablebandwidth; 

 
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Efficient content distribution through the ability to broadcast high quality signals from a single location to many locations simultaneously;

 
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The ability to extend beyond terrestrial network end points, or provide an alternative path to terrestrial infrastructure, thus avoiding points ofcongestion or unreliability; 

 
 • 
Fast network deployments, with network performance easily replicated across each site regardless of geography or infrastructure, and efficientcentralized control and management; 

 
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Superior end-to-end network availability as compared to the availability of terrestrial networks; and 

 
 • 
Instant communications infrastructure for disaster recovery. 

There is a finite number of geostationary orbital slots in which FSS satellites can be located, and many orbital locations already holdoperational satellites. The owners of these satellites operate them under coordination agreements designed to avoid interference with other operators’ satellites. 

Today, there are only three FSS operators, including us, providing global services, which is increasingly important as multinationals and governments seek a one-stop solution for obtaining globalconnectivity. In addition, there are a number of operators with fewer satellites that provide regional and/or national services. Intelsat is the largest of any operator in terms of rights to orbital slots in the most valuable C- and Ku-bandspectrums. 

We believe a number of trends are creating increasing demand for satellite services, expanding the FSS sector:

 
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*Globalization* of economic activities is increasing the geographic expansion of corporations and the communications networks that support themand creating new audiences for content. Globalization also increases the communications requirements for governments supporting embassy and military applications. 

 
 • 
*Connectivity and broadband access*are essential elements of infrastructure supporting the rapid economic growth of developing nations. Globallydispersed organizations are increasingly moving to satellite-based infrastructure to provide better access, reliability and control. 

 
 • 
*Proliferation of content and formats* is resulting in increased bandwidth requirements as content owners seek to maximize distribution tomultiple viewing audiences across multiple technologies. High definition television (“HDTV”), three-dimensional high definition television (“3DTV”), Internet distribution of traditional television programming, Internet protocoltelevision (“IPTV”) and video to the handset are all examples of the expanding format and distribution requirements of media programmers. 

 
 • 
*Mobility applications*, such as wireless phone services, maritime communications and aerial services, are fueling demand for bandwidth on themove. Rapid growth in cellular services for developing regions is expected to transition demand for voice only services to demand for data and video services over time, resulting in increased network bandwidth requirements. Given the low penetrationof fixed-line telephone services in emerging markets and the introduction of smart phones and netbooks, Internet access in these markets may be primarily mobile. Significant technology advancements in aerial data and video services for governmentapplications, such as unmanned aerial vehicles, also is resulting in increased demand for satellite-based bandwidth. 

In total, C- and Ku-band transponder service revenue in the FSS sector is expected to grow at a compound annual growth rate (“CAGR”) of 4.5% from 2011 to 2016 according to *NSR*. Thefundamentals of the sector have consistently improved over the past few years, with continued strong demand despite the generally poor economic environment in many regions of the world. 

 
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**Our Customer Sets**

We are the largest FSS operator and, based on the number of transponders contracted, we hold the leading position in each of our three customer sectors: network services, media and government.Characteristics of our customer sets are summarized below: 

 

**Year Ended**

**December 31, 2010***
  **% of Total**