Nordic Satellite Close To SIRIUS 4 Decision

Nordic Satellite CEO Lennart Hallkvist expects the operator to decide in the next couple of months when it will order its new SIRIUS 4 satellite.

“SIRIUS 4 is still high on the agenda for us. We need to continue, in the coming year, to discuss with manufacturers [in order] to specify a satellite which will suit our needs. We will only need to order one large satellite or two small satellites in the coming years. We can still handle 2004 and 2005 with existing capacity. We will have to take a decision later on this autumn,” Hallkvist said.

Nordic Satellite owns and operates the SIRIUS satellite system, a broadcasting and broadband infrastructure covering the Nordic region and Eastern Europe. It consists of three satellites (SIRIUS 2, SIRIUS 3, SIRIUS W) located at 5 degrees East Longitude and 13 degrees West Longitude. SES Global [Luxembourg: SESG] and the Swedish Space Corp. jointly own the company.

Upward Trend

The satellite operator is expecting a flat year in terms of revenues, although Hallkvist believes there could potentially be a recovery in the broadcast market in the not too distant future. “Our customers tell us that they see a slow upward trend when it comes to revenues from TV advertising. That is the same for us. If they gain more revenues, they will be able to buy more services from us. We follow their trends. We expect things to be a bit flat but to improve in the autumn time frame.”

One of its main customers in the Nordic region is Modern Times Group (MTG), which is the largest pay-TV provider in the region. It has around 600,000 pay-TV subscribers, although its numbers have been dipping in recent months. MTG believes that this is more a result of piracy than a general malaise in the market. However, with MTG implementing a new conditional access (CA) system from NDS [Nasdaq: NNDS], the numbers should start to increase again, which should mean good news for Nordic Satellite.

Hallkvist observed: “MTG will look to implement more interactive services, as well as services connected to the next generation of STBs. That will give a boost for other services and the need for additional bandwidth. We see the possibility of more betting services over the TV. This will also increase the need for bandwidth.”

MTG’s Viasat pay-TV unit will come under pressure from digital terrestrial television (DTT) alternatives in Scandinavia. Hallkvist believes this will offer further opportunities for the operator. “When it comes to DTT, with the geography in the countries of Scandinavia, maybe with the exception of Denmark, it is very expensive to build a DTT network to cover 100 percent of the population. The last 10 percent will probably cost the same as, or more than, the first 90 percent. We see a place for satellite to cover the last portion.”

Broadband = 10 Percent

Like a number of other fixed satellite service (FSS) players, Nordic Satellite is looking for opportunities from its traditional broadcasting base. Unlike some operators, expanding into the area of government services is not really an option for the company, as Scandinavia is well covered by fiber. However, broadband services are a different matter and Hallkvist believes there is huge potential here for his company. “Within two to three years, we are targeting around 10 percent of our revenues to come from broadband services.”

Hallkvist believes the dynamics are well suited for satellite broadband services in the region. Nordic Satellite already has an agreement with Swepet Satellite, the first Internet service provider to use the SIRIUS satellite system to provide high-speed connections throughout the Nordic region.

“We see now there is potential to start-up a high speed Internet service for residential households. That looks very promising. We have interest from several service providers to do something there. More than 25 percent of the households in Scandinavia will not get a terrestrial broadband connection in the foreseeable future. PC penetration in this part of the world is very high so there is a large interest for increased speed in the Internet connection. We expect to see this move a lot more next year,” Hallkvist said.

While broadband is one target in terms of further growth, the operator will also hope to make more of an impact in central and Eastern Europe. In the last year, it has signed contracts to supply TV and radio services in countries such as Ukraine and Romania.

“In countries like the Ukraine and the Baltic states, very little has been done in terms of satellite broadcasting. So far, it is mainly TV and there will be growth there in those countries. When it comes to growth areas in the coming years, we want to have secure expansion in the broadband sector in Scandinavia and establish ourselves as providers of TV services over satellite in one or two countries outside Scandinavia,” noted Hallkvist.

–Mark Holmes

(Anna-Karin Modigh, Nordic Satellite, e-mail: [email protected])