Common Ground: The Survey Says…
by Clayton Mowry
Take a quick look at the global stock exchanges today–the Nikkei in Japan, New York’s NASDAQ or Dow Jones Industrial Average, the Paris CAC-40, London’s FTSE, and the German DAX. They pretty much all tell you the same story. Technology stocks have been beaten down–including communications and aerospace stocks. The Internet bubble has burst and, with it, the fate of many related high technology companies.
The satellite industry hasn’t escaped the carnage. Share prices are down for many of the high-flying satellite companies. Bankruptcies and layoffs have given several sectors a black eye while cautious analyst projections have dampened interest from large institutional investors. Couple these broader industry trends with satellites’ past problems relating to the deployment of high profile mobile satellite services, and you’ve got a tough sell if you happen to be out raising money.
Are the hand wringing and depressed share prices justified? How is the satellite industry really doing in terms of sales, revenue and growth?
The Satellite Industry Association (SIA) recently completed its fourth annual survey of over 800 international satellite telecommunications and aerospace companies in our continuing effort to establish benchmark statistics on revenue and employment for our industry. This year’s survey was again conducted by Futron Corp. The SIA survey results include statistics on four key industry segments: satellite manufacturing, transponder leasing/retail satellite services, ground equipment manufacturing, and launch services.
The survey results for 2000 show solid growth across most sectors of the commercial satellite industry. Overall, worldwide satellite industry revenues reached $81.1 billion– reflecting a revenue increase of more than 17 percent over the adjusted 1999 total of $69 billion.
Satellite services clearly continue to be the driver for growth in the other three sectors: satellite manufacturing, launch and ground equipment. Satellite services represented nearly half of the total industry revenues at $39.5 billion. Traditional transponder leasing accounted for $8.4 billion in services revenue, up from $8.1 billion in 1999. Continued growth in the IP data traffic market helped to absorb new capacity as millions of new “netizens” logged onto the Web.
But it is the subscription, or “retail” satellite services, including direct broadcast television, that amassed the most impressive gains, climbing to $31.1 billion in 2000 from $22.5 billion in 1999. Strong subscriber growth in the United States, Latin American and European direct-to-home satellite television marketplaces continue to bolster revenue in this dynamic industry segment.
Meanwhile, ground equipment manufacturing ranked second at $17.7 billion last year, up from $16 billion in 1999. Home satellite dishes/set top boxes and strong VSAT system orders generated 10 percent growth in this industry segment.
Global satellite manufacturing appeared to rebound in 2000 as several new orders were booked with European and U.S. suppliers. The survey indicated that revenue to both prime contractors and major subcontractors is expected to top $16 billion in 2000. Spacecraft manufacturing revenue is also expected to jump in 2001 as several of the new Ka-band systems begin construction.
While the beginning of 2000 looked bleak for the launch industry, a flurry of year-end launches put the sector on solid ground as revenues to primes and subcontractors reached $8.2 billion, up from a disappointing $6.6 billion in 1999.
Clearly our industry is healthy and growing. While stock prices reflect more than simple increases in EBITDA or revenue, satellite companies can point to an industry that continues to thrive in the face of increasing competition.
That’s not to say we don’t still have our problems. Strict export licensing regulations continue to thwart international cooperation and sales by leading U.S. companies. Satellite service providers and ground equipment companies continue to fight for open market access in countries around the world. Competition for spectrum between satellite and terrestrial communication services is forcing us to cede or share spectrum in a host of bands.
The results of the SIA annual industry survey should give us hope for the near term future of our industry. Futron’s projections for 2001 show our industry should top $90 billion in revenue for the first time. Satellite companies must continue to do what they have done for the past three decades–innovate and continue to create valuable communications services for their customers. As long as they do, we will continue to prosper.
Clayton Mowry is the executive director of the Satellite Industry Association. His email is email@example.com.