Latest News

Satellite CEOs Repeat SATELLITE 2007 Clashes in Paris

By | September 4, 2007

      Leaders of the world’s largest fixed satellite services companies clashed on a variety of topics during the CEO panel at Euroconsult’s World Summit for Satellite Financing in Paris, echoing similar clashes that took place at SATELLITE 2007 in February.

      Long-Term Launch Deals

      The first topic, which produced a heated debate, was the subject of bulk buy launch contracts. SES Global signed deal with Arianespace and ILS in June to secure access to space over the next few years. “The reason we have done this is that access to space is going to be key,”Romain Bausch, CEO of SES Global, the world’s second-largest satellite operator, said Sept 4. “The market is tightening up. We negotiated quite creative conditions with Arianespace and ILS. Based on the launch, we can decide which launch vehicle we select. We have four launch slots for each satellite. We consider this to be key. We don’t consider this an overbooking. We have other satellites to be launched so we can enter into new agreements on top of this.”

      Bausch found support from Dan Goldberg, CEO of Telesat, which is set to become the world’s fourth-largest satellite operator once the company’s merger with Loral Skynet closes.“I would say to understand the benefits of bulk buys, you have to understand the intricacies. I believe having that kind of flexibility will be very useful to SES,”he said.

      But Intelsat, the globe’s largest fixed satellite services company, is not looking to go down such a route just yet, said David McGlade, the company’s CEO.“In terms of bulk buying, it has made sense for Intelsat in the past. There are situations where you have a constraint of supply. However, I don’t think long-term deals are the best thing to do when launch services are tight. But we are always looking into the viability of such things.”

      But it is not necessary to be a large operator in order to secure launch deals with favorable rates, said Goldberg and Andrew Sukawaty, CEO, of Inmarsat “At Telesat, we have two satellites that we will be launching in the next 18 months,” Goldberg said. “We are out there sufficiently enough that we are able to do a good job with the launch providers. I don’t believe we have been prejudiced by being a smaller operator.”

      Sukawaty added, “We are not bulk purchasers of satellites. Having said that, access to space is quite important. It has been the policy of Inmarsat to keep two options open. We did that in Phase 1 of the Inmarsat-4 program. It is all about access and having multiple options. There have been fluctuations in price. It is difficult to make business plans with the fluctuations in pricing, but I haven’t seen signs that bigger is better in procuring satellites.”

      Another hot topic was the influence of private equity (PE) firms in the satellite industry, as most of the CEOs hailed their influence. “In the last six to18 months, I had the approval of the board to order five satellites,”said Giuliano Berretta, CEO, Eutelsat. “I don’t think PE firms have forbidden us to buy satellites. The common aim is to win. It is not about controlling the little boy,” he said.

      “I think PE has been good for the industry,”said McGlade. “It is an industry that can sustain debt and still be successful. We need to sustain the discipline over the last few years. We have seven satellites in the factory. I have not had the board of directors who turned down a request for a satellite. PE has been good all the way around.”

      Goldberg said, “PE owners are more disciplined from a capital expenditure perspective. I think there has been some [capital expenditure] constraint over the last few years, but it might of happened anyway because the industry had previously overbuilt,”he said.

      Bausch was the dissenter of the group. “If I look at the presentations yesterday, it is very clear there has been the decrease the number of satellites,” he said. “The question is if that is related to PE or is that a coincidence? Also, you don’t need to be owned by PE companies to be disciplined.”

      Satellite broadband was another hot topic given the number of initiatives in this area and it continues to be an area where satellite operators want to perform better. Perhaps the most surprising comments here came from McGlade, who while hailing the performance of WildBlue, said he was frustrated that the numbers were not even better.“I think there is huge promise with broadband, but I am frustrated about the pace of growth,”he said.“When I was involved in the cellular industry, I once added 1.5 million subscribers a month. (WildBlue is adding around 30,000 subscribers a month.) I would enjoy seeing an acceleration in what we have done.”

      With the World Radio Conference-07 only a few weeks away, all the satellite operators sang from the same hymn sheet when talking about the merits of satellite keeping its access C-band capacity. However, Sukawaty, believes the industry could have perhaps done more sooner to get its message across. “We are preaching to the choir (C-Band), but the choir was not loud enough,” he said. “We are up against a huge demand for lower frequency spectrum. Government leaders need to make some responsible decisions when assessing the services satellite operators bring through C-band.”

      McGlade added that while the satellite industry may not have the financial firepower of the telecoms industry, regulators need to look beyond that when assessing the C-band issue. “It is crucial we protect our customers with regards C-band. There are clear interference issues. You don’t have to be the biggest to be the best here,” he said.

      Click on a tab to select how you'd like to leave your comment

      Leave a Reply