Samer Halawi CEO, Thuraya
The MSS market is currently one of the most dynamic markets in satellite and Thuraya Telecommunications Company, the Middle East-based MSS operator, is looking to expand its presence in the sector, particularly in markets like Asia. The operator is now under the stewardship of Samer Halawi, who was appointed CEO of Thuraya in February 2011. Here, he talks about the challenges ahead after his first year as Thuraya’s chief executive, his concerns for the MSS industry and how the operator is working to make the most of its potential.
VIA SATELLITE: What is your capital expenditure plans for new satellites?
Halawi: If you look at what has been happening in the industry, it is interesting how the lines have blurred between the FSS and MSS sectors. There is movement in all directions. I think Thuraya is in a fortunate position, as we have not yet unveiled plans for what we want to do for the next generation. Today, we have a satellite covering Europe, Africa and the Middle East that will last well into 2018 and another over Asia and Australia that will last until 2023. We have time before we have to make such strategic decisions. Having said that, the way we are looking to do this exercise is that we want to forecast properly what the market demand is, and where the market is. It is not necessarily in L-band, Ka-band or Ku-band. It might be a mixture of all of those. It might be something different. I feel we are a bit different and in a unique position compared to some of our competitors as we are starting with a blank sheet of paper and looking at what makes sense from a market point of view. We are going to be much more flexible in our decisions. This is something we will likely engage in the second half of this year, so decisions on new satellites could be made later this year.
VIA SATELLITE: Does Thuraya have a Ka-band strategy?
Halawi: Right now, I believe that customers are looking for managed solutions, irrespective of a frequency band. They don’t really care about the type of bandwidth. They just want something that works. I don’t expect us to be limited to a certain frequency band in our future strategy. We are looking more into service bundling and managed services. We could look into some alliances and work with other companies to provide the solutions that the customers want. We are quite flexible in our thinking and haven’t yet committed one way or another. Ka-band has some benefits, but also some limitations as well. It has quality and reliability issues and is still open to question about how it will do in the mobility arena. It is also going to be on the expensive side. Ka-band does cater to a certain segment of the market, but obviously we have to look at a number of segments and not only one.
VIA SATELLITE: How will Inmarsat and Iridium’s (Global Xpress and NEXT) aggressive investing in new constellations impact the MSS market during the next few years?
Halawi: We have some concerns. We look at the industry and see something that we call ‘irrational financing’ of very expensive constellations that are pretty much targeted towards voice services. I think high-speed data services is where the key growth can be found. My concern is that there might be some signs of value destruction and equity destruction in the industry, where we may see a repeat of some of the things faced by the MSS sector more than 10 years ago. Our other concern is the ever-increasing blur between the lines of fixed and mobile satellite services. With Ku-band moving in on the biggest L-band maritime markets for mobile satellite, this competition has begun to erode value. Our concern is that the MSS and FSS industries are bumping heads to such a degree that a lot of money is potentially being left on the table. But, the MSS industry is one that is growing and will continue to grow. There will be a lot of demand for L-, Ku- and Ka-band capacity. Managed services that encompass all of them will be in demand. We think it is important for all players to be careful in how they make decisions and ensure that there is no ‘value destruction’ happening in this industry.
VIA SATELLITE: Do you expect a repeat of recent history regarding the MSS industry and operators falling by the wayside?
Halawi: GSM is now available in many places and areas that used to be connected solely via satellite, so it would be inappropriate for any of us in the MSS world to say anything other than our voice revenues are not growing as they were before. It is something we cannot fight. Although voice services are growing in terms of subscribers, they are not growing that much in terms of revenues and minutes of usage. When you look at investments in the billions of dollars, you wonder if there is going to be enough return on investment. Companies that are focused on voice revenues will face difficulties. The industry has suffered enough in terms of damage to its credibility; it is not good if this is repeated. We are focusing more on data since services are in demand from the corporate world, with an estimated growth of around 25 percent year-over-year, compared to a 4 percent growth in voice.
VIA SATELLITE: Has the global economic downturn had any impact on your operations?
Halawi: At the same time as the economic downturn, there was the Arab Spring, so they kind of canceled each other out. The Arab Spring had a positive effect for all of the mobile operators. It triggered a short upsurge of activity, but not for as long as it would have a few years ago, for the world is now well covered with terrestrial services. Iraq and Afghanistan were countries that did not have GSM networks when there was a big surge in demand in those areas. There is a negative effect from the global economic downturn, but I think the biggest threat to all of us is the expansion of GSM over land. The downturn would have more effect on the maritime environment, where less ships are being built and less cargo is being shipped between world markets. For us, the impact is limited as we are not heavily involved in that market yet.
VIA SATELLITE: How do you view the government and military market for Thuraya?
Halawi: It is very difficult to tell, as we essentially operate as a wholesale player, but revenues coming in from governments are increasing. There is a lot of interest from governments around the world in our specialized solutions for secure communications. We have some unique technologies. We can put together commercial packages to suit the exact needs and wants of this vital sector that others may be unable to replicate. We are in a unique position because of the satellites and capacity that we have, which allows us to offer packages that fall between mobile and fixed satellite. Because of that, we are able to uniquely cater to the government segment that is showing greater interest in our solutions. The adoption has been increasing during the last year.
VIA SATELLITE: How do you view the Asia opportunity for Thuraya?
Halawi: We opened an office in Asia four to five years ago, but the satellite that was supposed to be launched over Asia was delayed for about a year. Hence, the momentum was lost. We have now re-established our presence in Asia. We have re-launched an office in Singapore and have a regional director and a team in place. We signed-up a number of new partners during 2011 and we have licenses in place in several countries. We are the only MSS operator that fully adheres to regulatory requirements and ensures that we have the commercial licenses to legally operate in every country where we are present. We believe this is an important differentiator. There is a lot of groundwork that was done in Asia in 2011, and I expect that 2012 will be a breakthrough year for us in terms of revenues coming from Asia.