Intelsat is the leading provider of commercial satellite services to the government sector, according to NSR, with a 33 percent share of the U.S. military and government use of commercial satellite capacity worldwide. With 50 years of experience serving this customer set, we have built a reputation as a trusted partner for the provision of highly customized, secure satellite-based solutions, using a mix of on-network, or Intelsat capacity, as well as off-network, or third-party capacity.

With revenue of $410 million, the government sector declined 16 percent compared to 2013, and accounted for 17 percent of our revenue for the year ended December 31, 2014. Government contracted backlog totaled $535 million at December 31, 2014, as compared to $577 million at year-end 2013.

Our satellite communication services business generated from the government sector, including our on- and off-network satellite capacity service sales, is generally characterized by single year contracts, which reflects the U.S. Department of Defense procurement rules with respect to our types of services. In 2014, the U.S. government budget sequestration and troop withdrawals from regions of conflict reduced the level of activity in our government business, resulting in a revenue decline.

Our solutions support a number of government applications, from highly complex, global mobility networks, to in-theater private data networks, as well as morale and welfare support, such as private entertainment networks. We also support intelligence, surveillance and reconnaissance activities, such as the communications channels for operating unmanned aerial vehicles.

In 2014, recognizing the on-going shifts in government spending levels, we continued to reposition our business, focusing on the provision of more complex, end-to-end solutions that include use of our ground network as well as our satellite capacity. We have been successful in implementing this strategy, as we seek to increase our value-add to the important government sector. In addition, we were selected as an approved provider under the Future COMSATCOM Services Acquisition (“FCSA”) program, and have built a solid track record of winning the business for which we compete under that program.

Intelsat also recently completed an important test of certain functionality on the Intelsat EpicNG® platform, specifically as it pertains to the interoperability of our Intelsat EpicNG digital payload with protected tactical waveform (“PTW”) modem on the digital payload. The successful demonstration of the compatibility and effectiveness of PTW modems on commercial satellites paves the way for the U.S. government to consider and procure commercial satellite capacity for PTW-based networks.

Focused on Complex, End-to-End Solutions

In 2015, the overall volume, pace of request for proposal (“RFP”) issuances and subsequent awards in this business area remain below historic levels, particularly with respect to new requirements. We remain optimistic with respect to the future use of our communication services for U.S. government applications, particularly as emphasis on increased cost efficiency grows. We are positioning to be a provider of choice, complementing the U.S. government’s own space-based communications capabilities. We are marketing expanded services to our customers, which we believe can provide increased cost and headcount efficiencies, while also building longer term contracted backlog for us.

Government Case Study

Intelsat General Corporation (“IGC”) recognizes the opportunity presented by the U.S. government’s need to attain new levels of cost efficiency in a post-sequestration environment. IGC continues to explore ways to develop professional and satellite services that address the government’s requirements. In 2014, IGC was one of four companies awarded a contract by the U.S. Air Force (“USAF”) to study the viability of using commercial facilities and operations expertise for the tracking, telemetry and command (“TT&C”) of government satellites. The goal of the contract, known as the Air Force Satellite Control Network (“AFSCN”) Commercial Provisioning study, is to provide USAF Space Command with a detailed plan for leveraging commercial TT&C facilities, such as Intelsat’s leading satellite flight operations center, and other capabilities to reduce USAF operations and maintenance costs substantially while enabling the government to meet national security space objectives and warfighter operational needs. The USAF has stated that a future space concept of operations could include a mix of government and commercial command and control networks.