Thuraya Chairman Targets Asian Market
Thuraya has had a busy 2003. The UAE-based mobile satellite operator saw its second satellite – Thuraya-2 – launched in June this year. The Thuraya-2, designed to operate for 12 years, is a Boeing GEO-mobile model satellite built by Boeing Satellite Systems. The Thuraya-2 satellite was put into orbit by Sea Launch, which also deployed Thuraya-1 in 2000.
The satellite, which has been initially placed at 28.5 degrees East Longitude, is pivotal to Thuraya’s growth strategy as it aims to break open new markets, in particular, the Asia-Pacific region. Thuraya has moved over all the traffic on its Thuraya-1 satellite to Thuraya-2. The capacity on Thuraya-1 satellite will be used as a key part of Thuraya’s ambitious expansion plans in Asia and other markets.
The operator has also picked up a substantial amount of business in Iraq in the aftermath of the conflict. It hopes this additional business will lead to profitability by the end of this year. In an exclusive interview with SATELLITE NEWS International Editor Mark Holmes, Thuraya Chairman Mohammad Omran talks about a challenging year for the operator and how the operator’s expansion strategy is taking shape.
SN: How many subscribers does Thuraya now have? What levels of growth do you expect in 2004? Do you still need 200,000 subscribers to become profitable?
Omran: By the end of next year, we expect to be in the range of 300,000 users. We still need 200,000 subscribers to become profitable and that is our target for the end of this year.
SN: Could you tell us about your capital expenditure plans over the next 12 to 24 months? What do you see as the major growth opportunities for the company? What are the major financial challenges?
Omran: We have one satellite being manufactured right now. This will be ready by the end of next year, or early 2005. This is part of a major expansion we have planned. We also have the normal, gradual expansion of our gateways, which is linked to the expansion of our user base.
We have just announced that we will be expanding our coverage over Asia. This will allow us to offer our services to new areas. We will be covering the maritime area from the Far East to Europe. This is a requirement for good maritime communications. We have also had discussions with certain users or companies in Asia, and we will announce deals once they are finalized. We expect to start work in the second half of next year in the Far East.
Basically, Thuraya has stabilized now financially. We have good revenues and good expectations in terms of revenues. Our revenues will grow compared to 2002. They are four times higher than 2002, so we feel as though the company has performed strongly here.
SN: What impact did the recent Iraq conflict have on the company’s operations in the Middle East? Did you see particularly strong subscriber growth during this period? How do you see the opportunities for the company in the region in light of recent events?
Omran: Iraq is a large country. A large part of their population lives out in [rural areas]. After the war, the country had no adequate communications system. We have been the only source of communications for the majority of people in Iraq. We have seen very good growth in Iraq and very good usage for our system. Our service is available all over Iraq. Our estimation indicates that we now have 45,000 to 50,000 users in Iraq out of our 175,000 subscribers. So, almost a third of our users are in Iraq.
SN: Are there any security issues with the Thuraya system? It was reported that U.S. military leaders in Iraq had banned the use of Thuraya satellite phones carried by journalists attached to their units due to security concerns. Was there any justification in this action?
Omran: It is not a question of justification. It was a decision made by the U.S. Army during the conflict, and it was only for a short time, and after that, everyone was allowed to use the system. We do not know the reasons behind it, but at that time, there was only a limited amount of users anyway. It came back to normal immediately. We are not aware of any security issues with our system.
SN: What are your targets in selling capacity on the Thuraya-1 satellite once you move it over to Asia?
Omran: The new satellite has replaced Thuraya-1. Thuraya-1 is the satellite we are planning to move over Asia next year. We have moved all the users to the new satellite. We expect to reach 200,000 users on Thuraya-2 by the end of this year. We will offer the capacity on Thuraya-1 to users in the Far East. In terms of selling capacity on Thuraya-1, we would hope to sell 10 percent of the capacity by the end of 2004, which would represent a good achievement for us in the beginning.
SN: Could you tell us about the new mobile broadband service you have launched with M2Sat? What levels of take-up do you hope to gain for the service? What do you see as the main target markets for the service?
Omran: The service with M2Sat [will offer broadband speeds] at 384 Kbps. It has been shown recently at many trade shows. We have seen very good reaction from the media, particularly where reporters are in areas where there is no adequate communication and they want to relay their news and information. The marketing of this is handled by M2Sat. I don’t have information in terms of what contracts have been signed. However, I am aware that there has been strong interest from several media organizations. The TV industry has been the major target market for this service. However, companies with high-speed data requirements, such as those in the oil and gas industry, have also shown an interest. This service will help them connect to their main network.
SN: What do you see as your competitive advantages over other mobile satellite service providers?
Omran: We have a very good system. The Boeing system is adaptable for change and adding new services. This has helped us in offering many new services, which were not available in the beginning, such as high-speed data, for example. We are also serving an area where there is a lack of telecom service alternatives. Once people have started to use the system, they have then come up with new requirements (public payphones). The third element is that we have a very good dedicated team, in terms of technical and business development, who come from our market, know the market and know how to communicate with customers in this area.
SN: What are the major strategic challenges for your company?
Omran: We have to look at reducing the costs of our services. So, this includes the price of terminals and the price of minutes. We have started that process by signing a contract for next-generation handsets, which will be smaller in size and have more functionality. Also, from time to time, we look at our tariffs. We look at customer needs and work harder to achieve their ambitions by offering them lower cost per usage. These are the main elements in terms of improvements we can make to get better results to the future.