[Satellite News 04-24-12] Avanti Communications announced a key hosted payload deal earlier this year when it signed a contract with the European Space Agency (ESA). The operator is also moving forward with plans to expand its fleet further. David Williams, CEO, Avanti Communications, talks about the ESA deal as well as what is on deck for the company in the rest of 2012.
SATELLITE NEWS: Can you give us a timeline in terms of what will happen with Hylas-3 now?
Williams: We are now hard at work building the satellite. The launch of the system is planned for 2015 and, in our opinion, there is quite a lot of slack in the timetable. Certainly the hosted payload will be ready in good time. It feels like a very achievable launch date.
SATELLITE NEWS: You announced a hosted payload deal with ESA. How significant of a deal was this for Avanti?
Williams: It was opportunistic and an interesting chance for us to move our business model forward. Avanti’s strategy rests on the notion that the world’s demand for data will continue to grow exponentially for the foreseeable future. Although we can’t forecast where exactly the demand for data will arise and in what form, to mitigate risks we always prioritize flexibility in our satellites; whether that is power shifting technology between beams; the use of dark beams; the use of steerable antenna; or the ability to move satellites between different orbital positions. By prioritizing flexibility we are confident we will be in the best position possible to exploit the highest margin/strongest demand, wherever that might arise. So, the Hylas-3 project fits into that strategy very well. We have been able to design a payload that is 100 percent steerable. The entirety of the 4 Ghz of capacity that we have on this satellite is capable of being steered anywhere in Africa or the Middle East, which means that we can be very selective in the markets we look to pursue or we can pursue one-off large deals with government customers. So, it gives us maximum flexibility in a region that we think is very interesting.
SATELLITE NEWS: Do you expect there will be other opportunities to do hosted payload deals for future satellites? Is this an opportunity you are particularly targeting?
Williams: We are not specifically targeting hosted payloads as they are pretty difficult deals and I think it is quite unusual to find two organizations whose interests are closely enough aligned that they can do a hosted payload deal in an easy fashion. I actually think they are not going to be a very big part of our strategy. However, if and when opportunities arise we will look closely at them.
SATELLITE NEWS: ABS and SatMex have gone down the route of “all electric” satellites having signed deals with Boeing. Is this something you would actively consider for Avanti?
Williams: Avanti has always been willing to consider very advanced technologies. You have to blend the advantage that you get from the advanced technology with the risks that you take on. In my opinion, electric propulsion does not add very great benefits to us. It has an impact in extending the life of the spacecraft at the back end, but when we are running our own return models, whatever is happening in year 15 through year 20 does not have a very big impact on our decision making. I don’t think that is the kind of risk that Avanti would be interested in taking, so we will wait and see how that development goes. The risk of a loss of a spacecraft on deployment because of a propulsion failure is not very palatable given I can’t see any short-term economic benefits for us. It is not the kind of deal we would look at.
SATELLITE NEWS: We have spoken about Hylas-1, Hylas-2 and Hylas-3. Are you planning to announce anything further this year?
Williams: If you look back at the date Avanti announced its first ever satellite project, in 2006, we are averaging one satellite every two years at the moment. I would certainly like to accelerate that, but that is on the basis that I want to give another 10 years of my time and effort building this company. I think it is certainly probable that we can do one satellite every two years, which means another five satellites before my energy levels start to drop. There is certainly enough demand for more satellite capacity, but we are now at a point in our evolution as a company where we have to consider satellites to be self-financing. We would not look to use any more equity to finance satellites so will be dependent on cash flows, commitments from customers and the debt markets. We have a clear intention to deploy more satellites to emerging markets, and we will be constantly working on that, and looking for the right opportunities to arise.
SATELLITE NEWS: Can you give us an update on Hylas-2?
Williams: The satellite procurement is on time and it will be up and fully operational in the summer. We have had good experience in sales and marketing of that capacity and there is a lot more to come in the near-term. We have been averaging around £11 million ($17.73 million) of new orders per month, which is enough activity to ensure that we fill the satellite in the four-year target that we have set ourselves. Sales performance is exactly in line with where we need to be. Crucially, we are hitting our price targets. There is sensational demand for this capacity in Africa and the Middle East with demand very high, particularly in Iraq and Afghanistan where there is some major nation building activities going on and major investment in infrastructure over and above the basic security demand. We are finding that East Africa and South Africa are also generating exciting demand so I am very glad that in 2008 we made the decision to deploy capacity in Africa.
SATELLITE NEWS: Military Ka-band was an interesting topic at SATELLITE 2012. How do you see the dynamics of this market now?
Williams: With the launch of Hylas-2, Avanti is in the fortunate position of being the only NATO domiciled company with military Ka-band capacity with military spectrum and military encryption. We have fixed beams and steerable beams over the Middle East. Those capacities are pretty unusual and there is certainly demand for those capacities. We are feeling pretty confident that Avanti will be in pole position to make these types of sales.