VIA SATELLITE: What is significance of the deal with GTSS?
Choi: The GTSS contract is significant for us as it is a confirmation of the ABS-2 business case. GTSS is already operating on of the largest television distribution platforms in Russia. The majority of the demand for ABS-2 comes from customers who are already operating successful businesses on ABS-1 and wish to expand their capacity. We have another deal in the pipeline which is about 100 percent larger than the GTSS deal in terms of dollars. These two deals, combined with the previously announced deal with Singapore Telecom, bring the total backlog of ABS-2 to over $300 million, which is significant at this stage of the program.
VIA SATELLITE: How do you see the African opportunity now for ABS?
Choi: We currently have a lot of capacity being used over Africa on ABS-1. I would say over 40 percent, but most of those customers are Asia-based operators such as PCCW and Singapore Telecom who are expanding their businesses into this region. We see Africa being a vibrant market but think it will become more competitive as there are more satellites launching in to the region over the next two years. There are also some cable networks running into the coastal areas of Africa. Service providers who have been making money by providing satellites IP backhaul services may see their pricing erode a bit due to the terrestrial competition. Regardless of the terrestrial or satellite competition I strongly feel that Africa will continue to grow as the region’s appetite for cellular backhaul, DTH, cable TV and enterprise networking will not slow down.
VIA SATELLITE: Is cellular backhaul a market you are targeting?
Choi: I think cellular backhaul represents today less than 20 percent consumption of our capacity. It is a growing segment overall for our industry. The mobile market is going to continue to grow in double digits over the next few decades. Satellites are attractive for this segment as laying of optical fiber into rural areas is significantly challenging from an ROI perspective, especially now that most of the urban cities in the developing world are now already saturated with cellular coverage. These mobile operators will expand their networks to rural areas where they will depend on satellites more than ever.
VIA SATELLITE: Do you expect the global economic situation to improve in the near term?
Choi: Today, we are in a situation where we have more demand for capacity and customers than we have available capacity to serve them. We have to turn away customers for most of our beams. This is the reason why we are prepared to launch such a large satellite for the ABS-2 program. If the downturn impacts one part of the market, we think we can recover and use that capacity for another market segment. I think that is the advantage we have with our position in the Indian Ocean region. We can serve customers in Africa, the Middle East and Eastern Europe as well as Asia. We have a lot of choices in where we can get customers from. While the FTA television market has suffered significantly the past two years due to the dramatic drop in advertising budgets, the pay-TV, mobile and data markets continue to grow. For assisting those risk averse video customers, ABS has put in place an end-to-end cable TV distribution solution inclusive of space segment, uplink and playout to enable several broadcasters to launch their business in Asia on a low-cost and risk-sharing basis with us.
VIA SATELLITE: What do you see as the major challenges for ABS over the next 12 months?
Choi: I think the global downturn in the past year has not really affected the satellite industry, but it has impacted our major customers like the video broadcasters. I also think it is impacting the financing ability of telecommunications customers. So it will be interesting to see what will happen with the global economy over the next couple of quarters. I think that most CEOs of our industry are hard at work making plans to hedge their positions in the event the global economic downturn affects our industry. ■
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