Analysts: Nigcomsat Failure A Significant Setback for African FSS Industry

By | November 25, 2008 | Broadcasting, Feature

[Satellite News 11-25-08] The failure of the Nigcomsat-1 satellite is a significant blow to the nascent African fixed satellite services (FSS) industry, according to analysts.
    Nigcomsat, which already was making plans for future satellites, lost the services of its first spacecraft, Nigcomsat-1, was shut down Nov. 9 after suffering power problems. According to reports, the satellite, placed in orbit in May 2007, has lost both solar arrays and is a total loss. When Satellite News spoke to Nigcomsat CEO T. Ahmed Rufai in August 2007, he said the demand for satellite capacity on Nigcomsat-1 had been strong, and that there would likely be plans for Nigcomsat-2 and Nigcomsat-3 satellites. Where the failure of Nigcomsat-1 leaves these plans, is now open to question.
    “Considering that plans for African regional FSS systems started two decades ago and have only just started to be realized, I doubt that this latest setback will be the end of the line,” Andrea Maleter, technical director, Futron Corp, said to Satellite News. “The current global economic situation may slow the recovery, but I expect something will come out of it.”
    Certainly, African based operators such as Regional African Satellite Communications Organization (Rascom) and Nigcomsat have had their teething problems. Rascom has had problems with its Rascom-QAF 1 satellite after the spacecraft suffered a helium leak shortly after its launch in late 2007. Rascom hopes for better luck with its next satellite. Rascom-QAF 1R will be manufactured by Thales Alenia Space, which also built the first satellite, and launched by Arianespace in 2010..
    “This (Nigcomsat-1) failure will only serve to reduce available capacity in the region for the short term, which may have a negative effect on prices,” said Chris Baugh, president of NSR. “The market for satellite capacity in Africa is quite robust though, so we fully expect a mix of global and regional operators to continue to satisfy demand in the region for the foreseeable future.”
    Flavien Bachabi, Intelsat’s vice president for Africa, believes established operators can more than meet Africa’s capacity demands. “The satellite industry has recovered from and grown after the satellite failures it has endured in its 40-year history,” he said. “Satellite services will always play an integral role in the communication landscape of Africa. We believe there is a strong business model to serve the region. Other businesses recognize this opportunity and this makes it likely that there will continue to be investments to serve Africa. The failure does underscore the necessity of having fleet resilience, or more than one satellite, to serve a region.”
    Maleter believes Nigcomsat’s future could depend on the level of support its gains from its Chinese partners. “The failure is a setback, but lessons will be learned from it and the Chinese space industry will put those lessons to use as it moves forward,” she said.
    However, it will be interesting to see how long it will take domestic operators can secure a place in the market following their early struggles.
    “There is no question that Africa presents a solid case for additional capacity in order to build a better business case on the ground, but the jury is still out regarding how the long-term competitive FSS picture in Africa will play out,” said Baugh.
    “The market for satellite communications in Africa has been quite strong recently, with key markets such as government services, GSM backhaul and video carriage growing solidly,” said Maleter. “This has, in fact, made some capacity hard to find – notably Ku-band. To the extent that these markets stay strong and grow, despite the economic environment, there is clearly a future for FSS operators.  There is, however, less certainty that independent operators with one or two spacecraft can be financially viable in the near or mid-term.”
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