Omran: Targeting New Markets for Thuraya

The satellite manufacturing industry received a much-needed boost recently when Thuraya Satellite Telecommunications Co. announced it had contracted with Boeing Co. to launch its Thuraya-2 satellite and build its Thuraya-3 satellite. UAE-based Thuraya began operating in 2001 and has already logged over six million minutes on its mobile satellite system. The company provides satellite-based mobile phone services to the Middle East, North and Central Africa, Europe, and Central and South Asia. In an exclusive interview with Interspace Senior Editor Mark Holmes, Thuraya Chairman Mohammad Omran talked about the operator’s ambitious plans and its road to profitability.

Interspace: You currently have around 35,000 subscribers. With the second Boeing satellite, how will this help you boost subscriber numbers? How many subscribers do you hope to have at the end of 2002?

Omran: Thuraya had attracted around 50,000 subscribers by end of June 2002, mirroring the company’s growth and overall position in the mobile telecommunication industry. In order to meet continuing requirements for Thuraya services, the company will early next year launch its second satellite, which will serve to consolidate system capacity and assure quality of service. Boeing has also been contracted to build [Thuraya’s] third satellite, which will act as back up and possibly serve to extend coverage in other areas and future requirements.

We must balance the market’s growing demand for our services without compromising the quality of our network. We believe Thuraya-2 will adequately meet that challenge. Complementing Thuraya-1 and Thuraya-2, Thuraya-3 will further extend the principle of mobility. We feel that expanding the coverage area is vital for Thuraya users. We aim to continuously provide further mobility with our current ability to provide quality of service. Our aim for the second half of the year is to [reach] at least 100,000 subscribers by the end of 2002, and I believe we will meet this target.

Interspace: You are planning to launch the Boeing satellite next year. What competitive advantages will this satellite give Thuraya? Could you tell us about your plans to develop your operations in the Asia Pacific region?

Omran: We will be launching the second satellite by early 2003. The second satellite will serve to consolidate system capacity. We are not particularly looking into one region only. For the time being, we feel it is good to take the time and study the market adequately so as to see which markets are worth pursuing. Asia is one but also Africa and the Americas are potential areas of interest. We feel that there is high demand for services we provide. We are a market driven company and we rely on the market to dictate where we will operate.

Interspace: Why did you decide on Boeing? What benefits will Thuraya derive from the Thuraya-2 and Thuraya-3 satellites?

Omran: Boeing is a pioneer in the realm of space telecommunications. Boeing Satellite Systems, the manufacturing arm of Boeing Space and Communications, is the chosen satellite manufacturer for Thuraya. Boeing has worked very closely with Thuraya since 1997, and we are very pleased that Boeing will build a third satellite, taking into consideration their expertise in this field.

Interspace: How many subscribers do you need in order to become profitable?

Omran: With our existing level of current revenue per user, we are confident that we can reach the breakeven point at, or before, 200,000 users.

Interspace: How are you financing your ambitious satellite launch program? How much debt does the company have?

Omran: Thuraya is in good financial standing. Our first and second satellites were fully financed from our equity and debt finance arrangements. As for our third, we will use our own resources. Thuraya has borrowed $480 million and started the first repayment at the end of June as planned.

Interspace: What are the major challenges going forward for Thuraya? How do you see the satellite landscape changing in the next 12 months?

Omran: The changing market’s demand is definitely a challenge we will meet. The need for satellite telecommunications will always be there and will continue to be there in areas where there is little infrastructure. The up and downs do affect the market, but not the need for satellite telecommunications. Voice will continue to be the major market for Thuraya, for some time to come. In the meantime, we are working on several new additions to our main services.