Yahsat CEO Discusses Future Plans, Possible LEO Partnership
Yahsat has been a busy operator over the last few years. The company acquired Thuraya in a major move in the Middle East which gave it a more complete product portfolio. Recently, it has made another move in IoT, acquiring a minority stake in eSAT Global, an IoT connectivity solutions providers that aims to bring low-cost, low latency direct-to-satellite IoT services to market. Last year, also saw the operator listed on the Abu Dhabi Securities Exchange (ADX) after a successful IPO. It all adds up to a busy time for Yahsat CEO, Ali Al Hashemi, who has now been the CEO of Yahsat for just over 18 months.
What is the next stage after the IPO, the Thuraya acquisition, the eSAT investment? Will Yahsat look to invest in Low-Earth Orbit (LEO) and what is its multi-orbit strategy? Via Satellite talks to Yahsat CEO Ali Al Hashemi about the operator’s mid- to long-term ambitions and where it stands on LEO investments.
VIA SATELLITE: Why did Yahsat decide to invest in eSAT Global? Is there a strong possibility you become a majority shareholder in the future?
Al Hashemi: Our investment in eSAT Global marks a major milestone within our IoT strategy and is an integral element within our efforts to be a key player in the IoT market. Our investment in eSAT represents an opportunity for Yahsat to participate in a fast-growing sector that is currently under-penetrated and is closely aligned with our strategy of prioritizing growth industries.
eSAT Global is an innovative IoT connectivity solutions provider that will bring a new disruptive, low-cost, low latency, direct-to-satellite IoT service to the market. The new IoT platform will enable the deployment of chipsets, modules and ground systems addressing growing demand for connectivity using IoT devices. The agreement also complements our vision to enable a new fleet of satellites, technology, services, and products that support the requirements of our customers to encompass next generation services programs.
Our agreement with eSAT has both our minority investment from Yahsat at a group level into eSAT – whose technology will leverage Thuraya GEO [Geostationary Orbit] satellites, and a commercial agreement with our mobility business, Thuraya. We look forward to our partnership with eSAT as we look to bring forward a powerful offering within the IoT segment to our customers and partners.
VIA SATELLITE: Yahsat recently released a strong set of results. What would you outline as the key growth opportunities for the company over the next two to three years?
Al Hashemi: During the last years, we are looking at this question very seriously. The Yahsat management and board have been looking at this, and we see many opportunities coming in the market right now. We are very well-positioned to take advantage of this. With the LEO constellations coming in heavily with five players that we know of so far, we think the market will be disrupted heavily. The question will be how to partner with them, possibly through a shared platform or becoming a satcom provider to them, or a partnership with them. The disruption could also create many opportunities for mergers and acquisitions. Also, another one that is grabbing is my attention is direct-to-device (D2D). As you know, Yahsat is owner of Thuraya and Thuraya has a legacy of L-band spectrum. So, we see small and big players knocking on our doors because of an interest in having L-band. We are very bullish about it. We think the right opportunity is starting from now.
Where the industry is heading in terms of direct-to-drive or direct-to-cell as our friends at Starlink call it, where it is heading, I don’t know. I think the picture will become clear in one to two years. But, we have to start right now to developing the business otherwise we will be very late.
VIA SATELLITE: Which verticals offer the most opportunity for growth?
Al Hashemi: What we are sure that we will do for the next two to three years is that we will continue to grow our government business, especially in sovereign communication and Earth observation. We might expand what we are doing in Earth observation, particularly answering difficult questions when it comes to sensing or it comes to communications capability. Our DNA is very strong in this element, and we know how to do it. It shows in our financial results, as 70% of our revenues come from the government. We know how to partner with neighboring countries to expand our services there. We will continue to do that very well.
In terms of consumer broadband, we see big discussions happening in the market, and I said there are disruptions and various opportunities coming. So becoming a satcoms solution provider or a platformer, and looking at M&A. This could enhance our ability to partner with a LEO constellation, or looking at similar opportunities like Thuraya. So, we can leverage the government relationship and expand our services. The direct-to-device is very important to us. Another one is IoT. We see the market is very fragmented here. Maybe by consolidation, we can expand our services and do things that will complement telecoms, or partner with telecoms players to expand our services in the IOT arena.
VIA SATELLITE: The big talk in the industry right now is consolidation and scale. Eutelsat has just done a deal with OneWeb. There have been media reports on talks between SES and Intelsat. We have had Viasat/Inmarsat also. What are your views on this? Could Yahsat take part in any consolidation in the future?
Al Hashemi: We are looking at consolidation very seriously. We are more attractive for consolidation after the deal we did for Thuraya and having that L-band spectrum. Our technical capabilities of developing top-notch applications is also something to consider. Thuraya 4-NGS, will see us launch over 16 new applications that weren’t there before. We will be competing with other players in the mobile satellite services segment. Our technical know-how, our global reach puts us as a very good player for a partnership. We are lucky to have a company like Thuraya which would make us attractive to the big players in the market.
VIA SATELLITE: SES bought O3b. Telesat is building Lightspeed. Eutelsat is acquiring OneWeb. How does a regional operator with global ambitions develop a strategy to compete with such larger entities?
Al Hashemi: Similar to SES and Eutelsat, we are looking for potential players, especially in the direct-to-device segment to expand our reach. I think the D2D is a very exciting development. We should focus our energy and try to develop this capability to enhance our reach. This is a natural evolution for the things we are doing and the capabilities that we have with Thuraya. L-band enables us to be a good player when it comes to D2D. We think we will have a partnership in the future to enhance these capabilities. We are looking at what will happen in this segment over the next year or so, then we can determine who are the real players in this sector, and what strategic moves we would like to make.
VIA SATELLITE: Could Yahsat launch its own LEO constellation?
Al Hashemi: Everything is possible right now. For sure, a partnership could work. It could be with the UAE government or an international manufacturer or a telecoms player. It has to be a partnership of some sort to bring credibility for doing a LEO constellation. The D2D could be a GEO player, if you have a global reach. We could partner with someone to have global coverage and then you can do it with GEO. LEO is a possibility.
VIA SATELLITE: Viasat buying Inmarsat and Eutelsat buying OneWeb are ambitious moves. Could we see a ‘splash’ move by Yahsat, something big?
Al Hashemi: I would simplify my analogy for answering the question. If I was the CEO of Viasat or Eutelsat, I would have done the same thing to be honest. I think it is the right move during this market. The market is being disrupted heavily. So, would Yahsat do something similar? If there is an opportunity that we think is financially feasible, and would create a big value for Yahsat financially, yes we would do it. That is why we are investigating heavily this direct-to-device. It is very early right now. But, it will make us pioneers if we talk to the right players/partners on this segment. All the players right now for D2D are on LEO constellations. There are big satellites and ambitious programs. I think we are in a bold position to do something similar. In short, yes, we are supportive of this kind of move. Due diligence would take at least 12 months in terms of doing something.
VIA SATELLITE: In terms of capital expenditure in new satellites, you plan to launch Thuraya 4-NGS, in the second half of 2024 and two new satellites, Al Yah 4 and Al Yah 5, possibly in 2026. Are you planning on any further investments in new satellites?
Al Hashemi: When it comes to government applications, the safest is GEO satellites. We have to continue our legacy when it comes to GEO satellites. I think when it comes to serving customers here, these three satellites will be enough for the telecoms part of GEO satellites. When it comes to Earth observation and sensing, there might be more developments with the government segment. When it comes to D2D, there might be more investment on this segment. Our ambitions are in the right place to create value for our shareholders.
VIA SATELLITE: How do you see the balance of your business between the government and big customers within the UAE and outside of your home territory?
Al Hashemi: I can say that we are very well positioned to increase our revenues, to acquire more revenue share when it comes to government services. But, our mandate is to increase our commercial revenues. We want to have a 50/50 split between government and commercial. This will be our focus for the next five years.
VIA SATELLITE: How is the integration of Thuraya is coming along? What are your plans to develop products and services using the Thuraya brand?
Al Hashemi: Thuraya is doing very well. Sulaiman Al Ali was appointed CEO of Thuraya. The integration is doing very well. We have the data solutions under the YahClick brand and the mobile solutions are under the brand of Thuraya. So, we are looking for seamless product integration and product/market development when it comes to products/commercial segment. This is really aligned with our commercial ambitions to create a 50 percent market split between government and commercial. So, in 2024, with the launch of Thuraya NGS, there will be launch of 16 new product lines, that are data centric in nature. As you are aware, the Thuraya 3s are very old and positioned for voice applications. We are moving to data applications. They are in three segments – land, maritime and aviation. We are very well covered with these applications.
VIA SATELLITE: Are we seeing innovation in the ground segment area for the likes of Yahsat?
Al Hashemi: You will see in the future huge in-house development and R&D. We are very serious about developing products and satcom solutions. We announced a JV with Tawazun for satcom modem development. We will announce shortly about our modem ambitions and development. I think this will help us very much as disruption comes into the market, to be able to have our own platforms, that can take advantage of the high capacities of our GEO satellites.
VIA SATELLITE: What do you see as the 5G opportunity for a Yahsat? How do you see our industry becoming part of a much bigger overall ecosystem going forward?
Al Hashemi: I think due to the D2D, this industry will be very positioned to create partnerships with telecoms players. You will see more partnerships involving telecoms and satellite players. We can see that with Starlink, as well as companies like AST Mobile and even Omnispace. They have strong partnerships with telcos to make their ambitions a reality. With Thuraya, we have roaming agreements with more than 100 countries. This will become a reality in the future to enable seamless communications. So, the 5G non-terrestrial will become a reality within in the next 3-5 years and we are very positioned to be part of that. 5G is very promising. It will enable us to be part of this overall play.
VIA SATELLITE: Do you think SpaceX and Amazon have been a force for good for the satellite industry?
Al Hashemi: They have been a force of good. I would say so far, so good. They have expedited everybody’s plans. Everybody was relaxed in their market position. Now, everybody thinks about their market position and consolidation very seriously. It is a force of good for the customer. The people who are not connected will be able to get connected in the future with cheaper devices or plans. They have made us think about what we need to do.
VIA SATELLITE: By 2030, how many ‘big’ global operators do you expect there to be?
Al Hashemi: That is a very interesting question, and very hard to answer. I think you will see fewer global players than you do today. I think the top three to four players will have a bigger influence than before. The biggest player right now is probably Viasat which has revenues of $3 billion if I am not mistaken. I think you will see it at least double, and you will see big players will have revenue numbers that we didn’t see before. Or you will see what happened in 1995, big failures of LEO constellations and bankruptcies, and people taking them over and turning them around. I think one of these will happen. It will be something extreme. I don’t think it will be something in the middle.
VIA SATELLITE: Yahsat is still a relatively young company. How would you outline your ambitions for the company? What are the challenges ahead for the company to achieve these?
Al Hashemi: The challenges are obvious. Disruption is coming. The data and broadband products will become more affordable and cheaper, and reachable to everyone. So, off-the-shelf, and easy installation. So, you will get your data quickly. We will focus more on private network type of solutions, and create the value of where we have our strength. We have ambitions in this space. The UAE is encouraging us to invest in this area. There was a recent announcement of three billion Dirhams fund for our space ambitions. This is around $800 million. I think this will continue to increase in the future. Yahsat should think seriously about creating a strong position in this space, and creating new revenue streams. We want to achieve things as a company, and a country, that were not achievable before.