Telenor Aims To Seize Mobile Satellite Initiative
Telenor Satellite Services (TSS) CEO Tore Hilde believes the land mobile arena will offer the satellite operator numerous opportunities in the coming years. While maritime will continue to be the main market for the company, it is clear the growth opportunities for the company lie away from this sector. Hilde told Interspace: “There is no doubt that the land mobile market will be the fastest growing market in the years to come. It is important to adapt to the market and develop the services and applications to meet the demand. On the land mobile market, we see a special group of clients emerging such as big corporations who have the need from anything from handheld to VSAT, and maybe further on to multicasting services. We would then have a complete portfolio of services.”
TSS is part of Telenor [OSE: TEL], the Norwegian telco and is one of the largest providers of mobile satellite services globally. It cemented its position last year when its parent Telenor acquired Comsat Mobile Communications from Lockheed Martin [NYSE: LMT]. Telenor also holds a 15 per cent stake in Inmarsat Ventures. The deal enabled Telenor Satellite Services to be in a position to offer a global service to its customer base. Further acquisitions are unlikely at this stage. Hilde says: “We are not necessarily looking for further acquisitions but we are always exploring new opportunities to expand our business. We don’t necessarily have to go through a restructuring process, but we are always exploring new opportunities.”
But operating conditions remain tough for TSS. In the second quarter of 2003, it had reduced revenues compared to the same stage last year, although the operator attributed this to the strengthening of the Norwegian krone (NOK) against the U.S. dollar and reduced sales of low-margin services. In the second quarter of this year, it had revenues of NOK 540 million ($71.0 million), compared to NOK 590 million ($77.6 million) in the previous year. This represents an 8.5 per cent drop. However, while the revenues went down, operating profits went up. In the second quarter of this year, TSS had an operating profit of NOK 59 million ($7.8 million) compared to NOK 31 million ($4 million) in the second quarter of 2002.
Increased profits and new business opportunities indicate that the future looks bright for TSS. The introduction of UMTS – third-generation mobile wireless – networks across Europe could emphasize the need for further satellite products. Hilde commented: “If you look further than 12 months ahead, there are areas of the world with high population where there will be a demand for communications. As the Internet has wider use, the demand will also come from these areas. In around 2-3 years from now, UMTS will set a new standard for services and connection to the Internet. I believe the more new services UMTS is introducing, the more demand there will be for services in satellite networks as well.”
The recent war in Iraq is an indication of the increased emphasis on global security. This could also provide further opportunities for TSS. “We have had a good year this year, with a good contribution from the war in Iraq, where there has been a lot of demand for mobile satellite services. It is quite obvious that Sept 11 has changed the world in terms of mobile satellite communications. There is now an increased focus from governments to improve security. This is an increasing market for us,” noted Hilde.
(Contact: Eunike Ditlefsen, Telenor Satellite Services, e-mail: email@example.com)