The deal was sealed Saturday between Alcatel and South Korea's state-run KT Corp., which plans to put the satellite, Koreasat-5, into orbit by early 2006.

Alcatel has been selected as Koreasat-5's manufacturer over Lockheed Martin of the United States and the British-German-French consortium Astrium.

"This will be our first military-purpose satellite," KT Corp. spokesman Cho Chul-Je told AFP, adding South Korea's military would use the satellite for its "operation and communication."

KT, however, declined to confirm a report by Yonhap news agency that Koreasat-5 would help the military to effectively collect security information in Northeast Asia.

It will also reduce South Korea's heavy dependence on US spy satellites, which have monitored North Korea's nuclear and other key military facilities, Yonhap said.

KT Corp. said it would use commercial transponders in the Koreasat-5 while the military would operate military-purpose transponders.

South Korea launched its first satellite in 1995 but it was replaced by the third one, Koreasat-3, in 1999.

Koreasat-5, which will replace Koreasat-2 launched in 1996, will allow local telecom companies to expand their mobile networks to Japan, China, Taiwan and the Philippines.

Koreasat-2 and Koreasat-3, now operating in geostationary orbit, serve the digital satellite television firm SkyLife and transmit the television programming of other broadcasting firms.

South Korean telecom firms and news organizations currently lease transponders on satellites for broadcasting and their own exclusive telecommunications systems.

SPACE.WIRE