The Fixed Satellite Services, or FSS, sector is comprised of over twenty-five operators worldwide with more than two hundred satellites in geostationary orbit. Commercial FSS providers principally generate revenues by selling transponder capacity to television broadcasters, telephone companies, companies that provide or require business telecommunication services (private data and voice networks), and companies that require Internet backbone facilities and related services.

The Direct Broadcast Services, or DBS, sector provides an efficient point-to-multipoint delivery of digital video and audio transmissions. DBS television has become commercially viable because available satellite technology now has sufficient power to provide adequate transmission to small receivers and because of the development of digital compression technology. The advent of high-powered satellites now allows customers to use satellite dishes as small as 45 centimeters and digital compression technology permits, on average, 6-10 channels of programming per transponder. Because satellite services are distance insensitive, FSS and DBS satellites are often used for the distribution of television and radio signals to television network affiliates, cable television operators, local radio stations and other redistribution systems; DTH broadcast transmissions of video and audio programming; data networking services, including voice, data and video transmissions within private networks; and Internet access and content distribution.

The FSS and DBS sectors are characterized by significant barriers to entry. The ITU is responsible for overseeing the use by different countries of the limited number of orbital locations and radio spectrum available to commercial communications satellites. There is a limit on the number of satellites that can be placed into service over any geographic area; for example, there are only approximately 180 FSS orbital slots that use the same frequency across the globe. Due to the finite number of available orbital slots over the equator for geostationary satellites, existing FSS and DBS providers that control the best orbital positions maintain a significant competitive advantage over potential new entrants. Entry into a particular market or geographic area is further restricted by, among other things, the capital investment required to procure a satellite and the technical expertise and cost associated with operating and managing a satellite. In addition, there are regulatory requirements required to provide services to, from, or within a specific country.

The Company’s broadcast service business segment services include both Canadian DTH service providers (Bell ExpressVu and Star Choice) use its satellites as a distribution platform for their services, delivering a package of television programming, audio and information channels directly to customers’ homes. Additionally, the Company provides bundled, value-added services that include satellite capacity, digital encoding of video channels and uplinking and downlinking services to and from the satellites and teleport facilities;.

The Company’s business network segment provides satellite-based wireless data networks in Canada and the United States and the related ground segment and maintenance services supporting these networks. Innovative applications include point-of-sale, electronic banking, airline and travel reservations, retail inventory management, video conferencing, distance learning, LAN-to-LAN connectivity and Internet and intranet requirements.

The Company’s telecommunication carrier segment provides capacity and end-to-end services for data and voice transmission to telecommunication carriers located in Canada, the United States and South America. Customers include Bell Canada, NorthwesTel and Star One. The Company’s consulting and other segment provides satellite-related consulting services to over 40 customers in 17 countries. A recent focus in the Company’s consulting practice has been a commitment to exploiting consulting opportunities in high-growth, emerging markets, including recent contract wins in Vietnam and Nigeria.

The Company’s subsidiaries segment comprises operation of Infosat, SpaceConnection and Telesat Brasil. These businesses are primarily resellers of satellite services, including mobile and fixed satellite services for voice, fax, paging, Internet access and broadband data applications as well as full-time channel and occasional use space to the major television networks and other broadcasters in the United States.

Amortization expense was $60.6 million for the first six months of 2006, an increase of $6.7 million or 12% compared to the same period last year.

Interest expense was $14.6 million for the first six months of 2006 compared to $14.9 million for the same period in 2005.

Other income was $7.2 million for the first six months of 2006 compared to $8.1 million for the same period in 2005.