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ST Engineering Exec Explains Decision to Buy Newtec

By Mark Holmes | July 31, 2019

ST Engineering President of Satellite Systems, Electronics Tang Kum Chuen. Photo: ST Engineering

ST Engineering is determined to build one of the most important companies in satellite over the next few years. Its acquisition of Newtec is yet more evidence of an progressive strategy to serve the industry better. Tang Kum Chuen, president of satellite systems, electronics, ST Engineering told Via Satellite that the acquisition of Newtec will strengthen its satcom business through products, solutions and a customer base that is complementary and synergistic to its U.S.-based iDirect and Singapore-based satcom businesses. “The combined business will put us in a stronger position to participate in the future growth of satcom and aligns with our strategy to invest in growth areas in the Smart City arena,” Tang said. “Newtec owns strong Intellectual Property (IP) in bandwidth efficiency and Ultra High Throughput technologies that will accelerate our go-to-market cycles, and offer customers superior solutions at a more rapid pace. The combination of advanced technologies from both companies will enable us to diversify and expand into new market segments and offer higher value-add in particularly to address emerging applications in 5G connectivity, broadcast and Internet of Things (IoT) segments.”

ST Engineering sees a lot of synergy with iDirect and Newtec and Tang believes there is “significant potential” to grow the satcom business. Having a footprint in Europe with Newtec will give ST Engineering access to new markets. When asked directly whether they would keep the Newtec brand, Tang declined to answer. “We will continue to invest in Newtec in Belgium to position it to be the Group’s European center for the satcom business. The complementary and synergistic effect of this proposed acquisition will enable us to meet demand across the full spectrum of the satcom market,” he said.

Once the transaction is closed, ST Engineering will implement an integration plan that includes integrating the two businesses with a common technology strategy and product offering roadmap that can address the evolving needs of its customers with higher value-add and faster response. It will combine the complementary technologies from both companies, enabling it to accelerate its time to market to meet emerging demands. “Customers will benefit from this proposed acquisition that incorporates the best of both Newtec and iDirect technology — highest efficiency, better performance, and greater flexibility to serve a wide range of markets and emerging needs,” said Tang.

The company now has ambitious aims. The company believes it can overcome what it sees as long-standing technology and cost barriers, which Tang believes has held it back in the past. To unlock the capabilities of next-generation satellite designs and enable seamless integration with cellular and fibre networks will be the key. “We will strengthen our leading position across enterprise, government and mobility markets with continuous innovation in efficiency, performance and scale that enable customers to monetise existing and new services,” said Tang. “We will develop the first universal, multi-access, multi-orbit platform that is able to harness bandwidth from any source and deliver a unified customer experience over a hybrid network. We also intend to leverage our air and sea mobility experience to expand into the land mobility market as part of our strategy to create new opportunities for our customers.”

It is an exciting time for the company, and the acquisition of Newtec, one of the leading European satellite companies, will only increase its presence. Tang admits we are seeing a rapid transformation of the satcom market with launches of new large satellite constellations at different orbits, and the integration of satellite with 5G networks. He says this will result in an increasing supply in capacity and lower bandwidth cost, unlocking new markets, new applications and driving an increase in demand for bandwidth. He added, “Satcom will become an essential part of the 5G infrastructure. With an enlarged IP and product portfolio, we will focus on accelerating the deployment of satcom-enabled 5G telco network, bringing high bandwidth connectivity seamlessly to remote regions. We will aim to address the growing needs for IoT and Machine-to-Machine (M2M) connectivity and applications for surveillance, data gathering, and big data analytics. Finally, we will aim to provide end-to-end solutions for the mobility market such as the connected cars segment.”

So, why is the time right for ST Engineering to invest so aggressively in satellite companies? Tang points to the fact that he sees satcom as a fast-growing industry with an expected CAGR of 8 percent over the next 10 years. He says ST Engineering expect the surge of Ultra-High Throughput Satellites (UHTS) and Low-Earth Orbit (LEO) constellations to increase bandwidth capacity and reduce operating cost, and as a result, create new demand and mass-market use cases.

But will it make further acquisitions. He says, “Mergers and Acquisition (M&A) is one of several ways by which we can support the Group’s growth strategy through acquiring strategic capabilities, access to key markets, new distribution channels or new customer segments. We have an M&A team that is constantly looking out for opportunities.”