UK: High Throughput Satellites: Laying The Foundations For Investment And Financing

Last Updated: 14 February 2014
Article by John Worthy

In today's world, High Throughput Satellite (HTS) projects are attracting significant levels of interest among operators, suppliers, service providers and customers. Scarcely a month goes by without a new announcement of a further HTS programme being planned. In this article, John Worthy, Partner at international law firm Field Fisher Waterhouse, examines some of the key ingredients for successful investment and financing of HTS programmes from a legal and regulatory perspective, including looking at where these programmes differ from traditional satellite development programmes.

From its first emergence as a recognised concept in around 2009, HTS has captured the imagination of many across the sector. The recent successful launch of Inmarsat's first Global Express satellite, following on other launches including Avanti, YahSat and EchoStar, along with many others in the pipeline, demonstrate the strength of the commitment which the sector is making to the HTS concept.

For many years, operators have been seeking ways to maximise efficient use of spectrum. HTS offers the capability to deliver many times the throughput of a traditional FSS satellite for the same amount of allocated frequency. While much of the commentary has focused on Ka band opportunities, the HTS concept is also applicable in other frequency bands, as illustrated by the Intelsat EPIC programme. The key distinguishing factor is that the satellites rely on extensive frequency reuse and multiple spot beams to increase throughput, which in turn reduces the price per bit delivered. In many respects the trend reflects the parallel developments in terrestrial broadband, both fixed line and wireless, and is designed to meet the expected surge in demand for broadband services.

The capacity of HTS programmes has increased hugely from early examples delivering 2-5Gbps to more recent launched satellites such as ViaSat1 delivering 140Gbps and future programmes expected to offer significantly more.

Against this background, many are asking how the development of HTS affects the approach to raising capital for corporate finance investments or debt financing. With around $12 billon due to be invested by 2016 in HTS capacity in excess of 1.4Tbps, the question is highly relevant.

Due diligence: a vital process

Assuming a prospective HTS operator can demonstrate the project is supported by a robust business case, debt and equity financiers will be looking to ensure that the necessary legal and regulatory structures have been put in place. This brings the focus to the due diligence which financiers will require. While attention is often focussed on the structure and terms of the financing transaction (and this is undoubtedly important to all parties), it is arguably the due diligence which can make or break the deal. If this diligence process does not demonstrate the robustness of the project (or if there are gaps which cannot readily be filled) then investors and lenders are likely at least to require additional protection (whether extra security, tighter covenants, reduced financing or increased interest rates or equity returns). Worst case, the operator may have difficulty in raising the financing required. This is especially true at a time when investors and financiers are scrutinising the merits of innovative projects ever more closely.

Spectrum: securing the orbital real estate

Looking at the key legal and regulatory areas of focus, one of the fundamental issues concerns access to spectrum. As with other satellite projects, an HTS programme depends on the strength of the spectrum rights available. Given the increasing congestion in ITU filings and the obstacles faced by operators in securing unencumbered spectrum, achieving full coordination presents growing challenges. Demonstrating how coordination will be dealt with satisfactorily will be a vital part of the due diligence review.

In addition, the upcoming ITU World Radiocommunications Conference (WRC15) is due to provide the forum for a highly significant debate, with the use of C-band spectrum by the satellite sector coming under challenge from the terrestrial wireless industry. Thus a prospective HTS operator wishing to use C-band will need to be prepared to show how these challenges can be averted or, at least, any adverse effect of the terrestrial spectrum usage can be mitigated.

Aside from the orbital spectrum, the operator will be concerned to secure the necessary landing rights. For many HTS applications, where the target footprint spans a number of jurisdictions, operators will need to develop and implement a plan for how to engage with multiple licensing administrations, recognising the local legal, political and cultural drivers affecting the regulators' processing of applications. Given the special characteristics of HTS networks and the extensive use of spot beams, this may include a programme to help the regulators to understand the benefits of the new HTS services and implications of multiple reuse of frequencies. The objective is of course to ensure, as far as possible, that all landing rights permits are progressed in an appropriate time frame, working with the local administrations.

The recent introduction by Ofcom in the UK of a regulatory framework for earth stations on mobile platforms (ESOMPs), covering terminals on ships, aircraft and trains, is an example of how a new regime can be introduced to meet a growing market need. The framework builds on analysis by the European Conference on Postal and Telecommunications Administrations (CEPT) and reflects Ofcom's conclusion that ESOMPs would be unlikely to cause interference to other services.

Some local administrations may also expect local gateways to be established for the downlink and signal distribution. Clearly some negotiation will be required in order to persuade the local regulators that gateways may not be essential in every jurisdiction within the footprint.

Integration with the terrestrial network

One of the special features of HTS will be the likely greater integration with the terrestrial network. The due diligence analysis will be impacted by whether the HTS programme uses a closed model, such as ViaSat or Tooway, or whether it is an open model, such as those adopted by Avanti, SES and Intelsat EPIC.

Where the operator uses a closed model, relying on a ground segment and a distribution network which it owns and operates itself, then it can show how the roll out, implementation and maintenance of this network will be managed successfully. Where however, as in many cases, the operator will be relying on partners to deliver and operate the terrestrial networks, the emphasis will be on showing to investors and financiers how these arrangements are effectively dovetailed through robust partnering agreements. Demonstrating how these agreements allocate the operational, technology, market, financial and regulatory risks in a satisfactory fashion will be a key part of the due diligence process.

Revenue streams

Turning to the essential area of revenue, the key implications for investment and financing will typically vary according to whether the programme is promoted by an existing operator or a new entrant. For existing operators, current revenue streams may be a valuable component in the bankability analysis since the cash flow will provide a level of comfort, at least in the early years, for debt service. At the same time, the projections for the HTS service will need to address how this new service will impact on existing revenue streams and the customer agreements which support them. Where this may lead to a potential reduction in the existing revenues, the issue will be how far this is simply a reflection of the changing market expectations or how far this could in reality amount to the cannibalisation of existing revenues. Equally importantly, where existing customers are expected to be moved to the new HTS service, careful analysis will be required on how the customer contracts provide for this transition.

Bankable contracts and governance

One of the key parts of the due diligence analysis will be the extent to which the core satellite procurement contracts are bankable. Negotiating the satellite procurement, launch services agreements and the insurance policies will of course need to be guided by the commercial dynamics of the operator's requirements and the counterparties' expectations. At the same time the expectations of the investors and financiers will need to be factored in, so as to ensure that these documents do not present major obstacles when presented as part of the due diligence package. Key requirements may include issues such as assignability for financing, requirements for direct agreements with financiers and effective step-in rights where appropriate.

Similarly, the corporate governance of the HTS operator may be a significant factor. Clarity on the rights of the respective shareholders (and any incoming investors), especially in a joint venture, and the balance between the equity shareholders and debt financiers should be addressed as early as possible in order to avoid potential difficulties in later negotiations. This will be equally important for an early stage operator as for an established operator or service provider who wishes to use a special purpose vehicle for the purposes of the HTS programme.


While many investors and financiers familiar with sector are increasingly comfortable with the risk profile presented by HTS programmes, each programme will be considered on its merits. Hence, the need for preparation for the due diligence is as significant as ever. In some cases, being effectively prepared for this process can mean the difference between a successful investment or financing within reasonable time frames and a long drawn out or, worse, unsuccessful transaction. Thus, being prepared will always pay dividends.

This article was first published in Satellite Finance magazine, February 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.