Satellite Executive of the Year: Khalid Balkheyour, President and CEO, Arabsat

In 10 years Khalid Balkheyour has created a powerhouse in the Middle East, which provides a textbook example of how to build a strong and vibrant regional FSS operator. His accomplishments as president and CEO of Arabsat have earned him our Satellite Executive of the Year Award.When Khalid Balkheyour became president and CEO of Arabsat in 2003, he was coming into an organization that had “1.5” satellites, a more government-based mentality, and that would need to define itself in a more commercial, business-orientated way. Fast forward 10 years and Balkheyour has created a powerhouse in the Middle East, which provides a textbook example of how to build a strong and vibrant regional FSS operator.

When Khalid Balkheyour became president and CEO of Arabsat in 2003, he was coming into an organization that had “1.5” satellites, a more government-based mentality, and that would need to define itself in a more commercial, business-orientated way. Fast forward 10 years and Balkheyour has created a powerhouse in the Middle East, which provides a textbook example of how to build a strong and vibrant regional FSS operator.

Last year was another banner year for Arabsat as Balkheyour continued to execute his vision for making Arabsat one of the strongest regional operators around. The company, once again, displayed strong numbers growing its revenues and profits by double-digit amounts. It signed innovative hosted payload and partnership deals and acquired the Greek satellite operator Hellas-Sat, which allows Arabsat to broaden its market reach even more. In short, the company continues to be a strong performer in every metric we use to measure the Satellite Executive of Year Award.

Balkheyour has done an outstanding job in building Arabsat and making 2013 an exceptional year for the operator. We are delighted to award him as our 2013 Satellite Executive of the Year for 2013.

“I am very honored and happy to win this award. This is a very big milestone for Arabsat and for me personally,” Balkheyour says. “I must say this is the product of teamwork in Arabsat. We have an excellent team here.”

Arabsat CEO Khalid Balkheyour with members of the Arabsat team at CABSAT 2013 in Dubai.

VIA SATELLITE: Let’s start at the beginning. When did your career in satellite start? What were your initial perceptions of the industry?

Balkheyour: Before I joined Arabsat, I was working in the Saudi Telecoms company. I was responsible for the operations of this government-owned telco. Part of my responsibilities was international operations, which involved the satellite side as well as the submarine cable. I moved to Lucent Technologies (which was AT&T) where I was still based in Saudi Arabia, and spent four years until I joined Arabsat in 2003. I have been here now for more than 10 years as the CEO.

When I first joined Arabsat, I thought the business was very slow. I came from the telecoms side where the world had been fiber projects, and terrestrial networks were a booming industry. There was a lot of growth in telecoms. However, my initial perception about satellite was wrong because there are great growth opportunities here and we keep discovering them. I am happy to be part of this sector.

VIA SATELLITE: When you came in to Arabsat in 2003, what were the key challenges to be addressed in the first couple of years?

Balkheyour: Arabsat was, and still is, an intergovernmental organization (IGO), which means Arab countries own it. It operates differently now — even though the ownership situation remains the same — but when I first came in, Arabsat had three satellites: one was a total failure, another one was 50 percent failure, thus we started up with one satellite and a half in two orbital locations; it was very challenging. The first thing I did, having full support of the board — they gave me some room to move, even though they still had that government mentality — we start reconstructing the organization to be more commercially driven as in the past, it had been more technology driven. We also made a restructuring of the workforce. We created marketing, sales and corporate strategy departments where we defined and aimed our strategy objectives more focused on the customer. We started with a five-year plan at the time, which took us to 2008. Part of the plan was to really stand on our feet and grow with our own resources. We did our fourth generation of satellites, which was two satellites, and we went on for more. We also updated the plan subsequently for a bigger fleet — bigger is better in our industry. That is how we did it. We restructured the company, and we became more goal and objective oriented. That was the initial phase.

The second phase after we had done this was starting with our fifth generation of satellites. This was done in the 2006-2007 timeframe. We built three new satellites, and we grew more and more. Later on, we realized we were getting saturated in terms of orbital slots, frequencies and spectrum. Therefore, we changed our strategy and looked at more partnerships, mergers and acquisitions, because we cannot stay stagnant with a business like this. The mentality in the organization changed from a government organization to a more commercially, business-orientated organization. We have a very good team here on all levels.

VIA SATELLITE: Was there a big cultural change that Arabsat had to go through? Were many resistant to change?

Balkheyour: Of course this was tough. We had to change the culture as mentioned earlier to be more business-driven, rather than technology-driven. Doing so, we had to look at our spectrums and how to fill up the satellites. Since there were demands, we had to work out how to segregate telecom and broadcast customers and adopt a new financial system in the company according to International Financial Reporting Standards (IFRS). So the whole mentality had to be changed. But yes, we had some people who could not cope with these changes and did not agree with them. We had to make sure that they did not block the way; some were given a package to leave, some retired. Then we recruited new people with more of a business mentality introduced to this company.

VIA SATELLITE: Given Arabsat’s unique ownership structure and the company’s bold vision to become the fifth biggest global FSS operator by 2020, how difficult is it to execute this vision?

Balkheyour: It will be challenging. We have to raise the bar high so we can reach it, or at least get close to it.

Three years ago, we were ranked number 12 in terms of global fixed satellite service (FSS) operators. Then, two years ago, we went up to number 10, and last year, we have gone up to number seven. Hopefully, with the acquisition of Hellas-Sat, we will move up still further. We are not that far away from the number five spot. Of course, there is quite a gap between the ‘Big Four’ and the ‘Next Big Four’ but we want to be high in the next big four.

VIA SATELLITE: The Middle East has always been a vibrant market for satellite communications where local players fit in with the industry giants. How do you view the dynamics of this region and how do you think they will evolve?

Balkheyour: We do have Yahsat, Arabsat, Nilesat etc. We partnered with Es’hailSat in terms of orbital positions, sharing the frequency with them. I see that as a win-win situation for both companies. But I don’t expect many more satellites to be launched in the next period because of the political situation in the region. Competition will be quite tough for all of us, but the market opportunity is there. Hopefully it won’t be hampered any further by the political situation.

VIA SATELLITE: Arabsat’s financial results have been highly impressive with 2013, once again, showing double-digit growth in revenues and profits. Is this sustainable?

Balkheyour: I hope so. If not double-digit growth, we hope for high single-digit profit and revenue growth. However, there are a few factors to be considered.

There is fierce competition in this region as the whole world appears to be focusing on it. Not only that, but some of our shareholders also launch their own satellites, which will also take market share. This is the reality of the market. Additionally, you have the big players such as Intelsat, SES, and Eutelsat. All of these players are putting a lot of focus on the Middle East and Africa. Yes, there will be growth in Arabsat, maybe not as much in the past, but as I said we will have high single-digit, possibly still double-digit, growth.

Ahmad-Al-Shraideh, sirector, technical planning; Khalid Balkheyour; and Salem Al-Khalifah, VP financial services

VIA SATELLITE: How would you characterize your leadership style? Who has been your biggest influence?

Balkheyour: We have to incentivize people for their achievements and their activities. However, people who are not willing to change have to leave. When I came in, I said, “The train is moving; you can either get on, or you will get left behind.” Some assistants of the president had to leave. We were open about it, there was no secret — we had direct, clear objectives and we started to move.

In terms of an influence, the board members have been highly supportive of what we have tried to do. Actually, what helped me is that in this region a lot of the shareholders who are telecoms operators have been privatized, which reflected in a big mentality change at the board level. So there has been a transformation across the Middle East and in countries such as Saudi Arabia, Qatar, and the United Arab Emirates (UAE). One can see the change from a government entity to private sector in telecommunications, and this was noticed at the board level as well.

VIA SATELLITE: If you could name one achievement you are most proud of during your time at Arabsat, what would it be and why?

Balkheyour: We have had many achievements during this time. If I could highlight two, I would say the overall organic growth of the company and the acquisition of Hellas-Sat.

In terms of organic growth, we own and operate five satellites in orbit, and one under construction. That took a lot of money for the shareholders to be convinced and go with that program. We are proud of that.

On the other hand, I would say the acquisition of Hellas-Sat was a major breakthrough for the company. There is a great learning curve when going international; it is not easy. Hellas-Sat has a different culture. They have different systems, taxes, and labor unions, which we were not used to. All of these presented a series of challenges to us and we are really proud that we have overcome those challenges.

VIA SATELLITE: Would you look for further acquisitions away from the Middle East?

Balkheyour: The acquisition of Hellas-Sat was very challenging and cautiously achieved by our shareholders. They were not questioning the validity of the deal, but we had a very cautious approach when pursuing it. It was a new organization with new rules, but for us it did signify a breakthrough.

Now that we have overcome that “phobia” of going international, the appetite becomes bigger. If there is a chance now, we will go for it. We saw this as a learning curve for the organization. We are still learning, but it was a good achievement and a good start for further deals, which I believe we are now ready for.

VIA SATELLITE: How important was it for Arabsat to break away from its Middle East roots and target growth opportunities away from the region?

Balkheyour: It was very important for us. When we looked at our strategic plan, we realized that if we don’t grow, we start to lose more market share. One of the ways to grow, after we have used up all of our spectrum and resources, we need to go beyond our market and look at other orbital slots and merging with companies. If we limit ourselves to just our home market, we lose momentum amongst our team. We need to energize them with new opportunities and targets.

When we put all this reasoning together, we had to look for opportunities outside of the Middle East. Hellas-Sat was a perfect fit for us. It is not too far from our region geographically and it was ready for sale. All the components were in favor of this transaction. That’s why we decided to grab it.

In terms of other opportunities, there was also a discussion with Asia Broadcast Satellite (ABS) and a few years ago we also had discussions with Measat, which we did not conclude. For Measat, they are a national satellite operator, and one of our strategies is to be in control, but there is only so much control you can have in a company that has a national flag in it so we walked out of those discussions.

We have been looking at other opportunities. One of the problems we find with some of the smaller operators that we look at is the ‘national flag’ issue, as well as local regulations. This has limited us in the past. But the appetite is there, and we are going to be interested in potential opportunities going forward.

VIA SATELLITE: Arabsat has signed interesting partnerships and deals around hosted payload. What is your view toward working with other players? Are there more partnerships to come from the company?

Balkheyour: We did make an agreement with Emerging Market Communications (EMC) on one of our satellites. You will hear more about this in the near future. You will see more partnerships with service providers and other companies.

With spectrum and orbital limitations, there is no room to grow. I don’t want to say we came in late in the game, but other players that had got in before us when spectrum was distributed are very keen to hold on to their resources. One of the ways to grow is to partner with other operators and service providers. It is cost-effective, particularly when you see launch costs are still pretty high in the industry. I think it will be more attractive to us to partner, merge or acquire.

Acquiring another company is not easy, especially when you consider the size of the investment. In the meantime, I think we will go for more partnership/Condosat agreements, hosted payloads, etc. If you look at the regional dynamics now, and what we have seen with the Arab Spring, I don’t think many governments will now go with their own satellites. But they will look to join forces with companies similar to Arabsat, and we are on the lookout for those opportunities.

VIA SATELLITE: Is the concept of a regional operator changing?

Balkheyour: It depends on how you define ‘regional’. I think for the existing regional operators, if they don’t grow, they will start to lose market share. That is the concept we work toward. If regional operators maintain their regional boundaries, the global operators will not give them a chance to sustain their business. They will come in and penetrate the market and take market share. Other operators, not just the ‘Big Four’, may also come in. Competition is multi-faceted. The geographical boundaries are disappearing for any operator that wants to grow.

VIA SATELLITE: What would you say has been your greatest challenge?

Balkheyour: I would say the biggest challenge I have faced has been in terms of resources: spectrum, orbital slots, and so on. Fighting and getting those resources really was a challenge. We have to coordinate with the big players in the market. These are very challenging milestones for the growth of any regional operator.

VIA SATELLITE: Where does Arabsat go next?

Balkheyour: We will be announcing some new deals very soon. We are in the process of putting in a request for proposal (RFP) for three to four satellites. Two of these satellites will be for Hellas-Sat and two for Arabsat. We have gained a new orbital position at 44.5 degrees east and we are growing at our existing orbital slots. The new RFP will be out shortly and will also contain some Condosat agreements as well as hosted payload agreements.

VIA SATELLITE: What is Arabsat’s view on High Throughput Satellites (HTS)?

Balkheyour: We have come to a conclusion internally that a Ka-band satellite for us is not going be viable commercially in our region for the time being. If we want to do a HTS, we will have two factors to consider. We will either have to have a pre-launch agreement with a customer where we could target a government type, or it could be a hybrid satellite with Ka- and some Ku-type capabilities to make a more attractive business case. In the next procurement phase for us, a standalone HTS is not part of the plan. The market is not ready for this in the Middle East. If we do this internationally, we have to be very careful about spectrum and landing rights. HTS may work for Europe and North America, but I don’t see it as being viable in the Arab world right now. VS

by Mark HolmesMark Holmes is the editorial director for Via Satellite and Avionics magazines.Satellite Executive of the Year: Khalid Balkheyour, CEO, ArabsatGait vero odiam velesti onsequi psumsan volor ilit adigna feui bla feugait praessi sseniat, suscilisim iriure consequisl dolorem zzrit praessi tem incilis adiate dolInvenia voloria quae nectaquia sume nem dolupta tempelitin nobitat.Borumquid magnitat. In 10 years Khalid Balkheyour has created a powerhouse in the Middle East, which provides a textbook example of how to build a strong and vibrant regional FSS operator. His accomplishments as president and CEO of Arabsat have earned him our Satellite Executive of the Year Award.

Ahmad-Al-Shraideh, sirector, technical planning; Khalid Balkheyour; and Salem Al-Khalifah, VP financial services

Arabsat CEO Khalid Balkheyour with members of the Arabsat team at CABSAT 2013 in Dubai.