Aramiska Sees Good Growth For 2003

Aramiska, the European two-way satellite broadband operator expects to end the year with 1,500 customers and somewhere between 2.5 to 3 million euros ($2.05 to $3.07 million) in revenues. The operator, which has been offering satellite broadband services since April, has posted a strong performance and is still on track to reach profitability by the second half of 2003. Philippe Bodart, Aramiska’s CEO, believes the operator will make further inroads into continental European markets in 2003. Bodart exclusively told Interspace: “We are expecting to see some good activity levels going into next year in France and Spain. France is actually our second largest opportunity from a broadband perspective after the UK. We also serve the smaller markets such as Ireland and The Netherlands. We are looking for between 15-17 million euros ($15.3 – $17.4 million) of revenue in 2003.”

Aramiska derives more than 90 per cent of its revenues from the UK market and has indirectly benefited from British Telecom’s massive campaign promoting the benefits of broadband. Bodart admits: “In terms of BT’s broadband marketing campaign, I cannot deny if you spend millions and millions of pounds in advertising and promotional campaigns, you create some demand. Inevitably, you are going to have higher take-up rates than if you were to do nothing about it. It is also affecting the SME community as they are much more affected by the awareness programmes.”

While Aramiska may look to enter other markets, the UK and France will remain the core focus for the foreseeable future. “I think the UK and France are really in a tornado as far as broadband take-up rates are concerned. They have been increasing dramatically in the last 3-6 months. Also, the governments in the UK and France are stimulating demand. There are kinds of regional development agency programmes, local municipality programmes etc. You have the whole public sector that is also driving demand for broadband connectivity,” notes Bodart.

The main competition for Aramiska still comes from the incumbent telcos, although with operators like Eutelsat and SatLynx (the JV between SES Global, Gilat Satellite Networks and Alcatel Space) trying to generate greater revenues from broadband, this could change. Bodart comments: “Neither Eutelsat or SatLynx have a retail offer in the market. They kind of have a wholesale model whereby they provide potential wholesalers and resellers a platform where they can expand on and offer those services to end users.”

He continues: “To a certain extent, they are around us but not competing head-to-head with us. Our biggest competitors are still the incumbents. It will probably be the incumbents for quite a while. I am expecting SatLynx in 2003 to be closer to our markets than they were in the past years.”

The operator is planning to launch its second generation of broadband services in 2003. The ARC Managed Broadband Service aims to cater for the SME community with a host of new services. There will be minimum guaranteed speeds on all ARC packages, plus support for an unlimited number of PCs and unlimited data transfer. Virus scanning, VPN support and local e:mail server will be standard on all packages.

Bodart comments: “Guaranteed bandwidth and quality of service are very important and key to businesses. We have seen guaranteeing availability and sustainability of bandwidth is a feature that is critical for all businesses. The introduction of VPNs is also very important for even smaller businesses and security on their links. You will see that the biggest change that we have is that all of our packages have that minimum guaranteed bandwidth, that security level built in. I think we are maybe more geared for competition and going head-to-head with DSL offers.”

Aramiska could also have new shareholders in early 2003. Aramiska’s main shareholder, Whitney, is actively in talks with European equity groups in an effort to bring in more funds for the operator. Bodart concedes the time to bring in new partners is fast running outt. He says: “It has been no secret in the last 18 months the company would like to attract some European shareholders into its shareholder base. We don’t need extra money, but more to gain extra visibility in Europe and have some extra relationships with the European financial community. So, we expect European based private equity firms to take an interest. If deals are going to be done, it will have to be the first quarter of next year.”

While the last few months have been successful for Aramiska, Bodart has no illusions about the challenges ahead. He says: “We now have proven that we can build a satellite broadband network from a technology perspective. We have shown that we can acquire a reasonable number of customers … I think our challenges in 2003 are to expand from that. We think we have proven that the underlying business model works … We have proven we can acquire customers. We want to do more of the same in 2003.”

— Mark Holmes