Regional Operators Optimistic Despite Tough Market Conditions
By Mark Holmes | September 10, 2008
[Satellite News 09-10-08] Regional operator growth strategies were one of the key themes today at World Satellite Business Week in Paris. Most regional operators, while naturally smaller than industry giants SES, Intelsat, Eutelsat and Telesat, they were all particularly optimistic that they could ride any credit crunch.
At a panel titled “The Dynamic of Regional Satellite Markets,” Cato Halsaa, CEO of Telenor Satellite Broadcasting commented, “We have more than 2.3 million DTH households in the Nordic region. We want to develop the 1 degree West into a hot spot in Europe. Satellite remains the fastest growing broadcasting infrastructure in Central Europe. We are expanding the numbers of transponders we have.”
The panel hosted a series of interesting and diverse operators. Both Star One and RSCC pointed to social projects in Brazil and Russia as driving their business.
Gustavo Silbert, president of Star One, said, “The government is demanding a lot of social inclusion projects. There is a project to provide broadband to 14,000 schools. This will be based on satellite.”
Alexey Ostapchuk, director general of RSCC, discussed similar projects in Russia which were helping drive its business.
“We are participating in national and regional governmental and social projects in areas such as distance education and universal telecommunications,” said Ostapchuk. “For example, there is a national project in education. There is an initiative to provide Internet access to 53,000 schools and colleges in 89 regions all over Russia. About 7,000 schools in 62 regions will have Internet access via satellite. There is another project to provide universal telecoms services to over 43,000 villages in Russia. Satellite will help in this project also.”
While operators such as Star One and RSCC spoke of social inclusion projects, other operators interestingly pointed to more out of region opportunities to grow their business.
Both Measat and Arabsat spoke of the opportunities to develop business in Africa.
Paul Brown Kenyon, COO of Measat said, “We are looking at Africa. We are now in the process of developing that business as a separate entity. We are now in a significant growth phase.”
Mohamed Youssif, CCO of Arabsat said the company was selling “a lot of C-band capacity in Africa.”
While some operators are looking at entering new markets, traditional video services will still continue to be a key driver in their home markets.
“We think there are a lot of opportunities to grow the market across the entire region (Asia),” said Brown Kenyon. “We still see growth across most of the major markets. There is still significant telecom growth. Pay-TV in Asia is still at an early stage. We have supported DTH in Malaysia since 1996. Astro could offer a 200 channel service over the next few years. We are supporting platforms in India and Malaysia. There is significant growth in video distribution. Some markets are open. Some are closed. But, there is a general trend to open up markets.”
Paul Sheridan, head of satellite at Optus, added to the discussion.
"We think there is an opportunity for satellite. We see HD and broadcasters continuing to drive growth into our business. For our business, HD is the primary growth opportunity,” he said.
"Market Growth and Innovation in Satellite Manufacturing," the other main panel for the day featured top satellite manufacturers cautiously optimistic.
John Celli, president of Space Systems/Loral commented, “I don’t see any downturn. The market will be driven by replacement satellites. There are still other markets from a satellite applications point of view.”
Celli added that his company has not seen any recent decrease in RFPs and RFIs.
“However, some of the contract awards may be delayed because of economic conditions. I think the market is still robust even if there are some delays,” he added.
Amer Khouri, vice president of marketing and business development for Orbital Sciences Corp. agrees with Celli, making his own observations.
“I do not see a downturn,” said Khouri. “But, I do think operators are more open to partnerships and joint ventures now.”
While FSS operators criticized the cost of launch services, there were also murmurings about the costs of satellites. In response to this criticism, Evert Dudok, CEO of EADS Astrium said, “There has been a lot of cost cutting done. Even with that cost cutting, it is still difficult. We are very selective in the contracts we take. We want to give our shareholders air to breathe. To provide a satellite with 15 years of performance, requires special requirements and qualities.”
Celli added, “I don’t believe there is satellite inflation. Frankly. I have not seen prices getting out of control. All of us have to take margins that appeal to our shareholders.”
Marshall Byrd, vice president and general manager of LMCSS added, “It is about risk and reward for this industry, and there can seem a lot of risk for very weak rewards. We try to bring down the costs as best we can.”
Most satellite manufacturers agreed that there were still a healthy number of RFPs out there although Reynald Seznec, CEO of Thales Alenia Space believes some of these RFPs are now getting more sophisticated.
“Proposals are getting more and more sophisticated,” said Seznec. “Clients want to go hybrid and can have satellites dedicated to both the government and commercial markets.”
Khouri added, “In small and medium satellites, there are a lot of RFPs. There are at least 3-4 RFPs in Asia right now. Last year, the start of the year was very busy and the second half slowed down. The pace this year has been very constant.”
Byrd also commented, “We have three out RFPs out and two RFIs out. That is normal traffic for us. We won’t chase everything.”
At a panel titled “The Dynamic of Regional Satellite Markets,” Cato Halsaa, CEO of Telenor Satellite Broadcasting commented, “We have more than 2.3 million DTH households in the Nordic region. We want to develop the 1 degree West into a hot spot in Europe. Satellite remains the fastest growing broadcasting infrastructure in Central Europe. We are expanding the numbers of transponders we have.”
The panel hosted a series of interesting and diverse operators. Both Star One and RSCC pointed to social projects in Brazil and Russia as driving their business.
Gustavo Silbert, president of Star One, said, “The government is demanding a lot of social inclusion projects. There is a project to provide broadband to 14,000 schools. This will be based on satellite.”
Alexey Ostapchuk, director general of RSCC, discussed similar projects in Russia which were helping drive its business.
“We are participating in national and regional governmental and social projects in areas such as distance education and universal telecommunications,” said Ostapchuk. “For example, there is a national project in education. There is an initiative to provide Internet access to 53,000 schools and colleges in 89 regions all over Russia. About 7,000 schools in 62 regions will have Internet access via satellite. There is another project to provide universal telecoms services to over 43,000 villages in Russia. Satellite will help in this project also.”
While operators such as Star One and RSCC spoke of social inclusion projects, other operators interestingly pointed to more out of region opportunities to grow their business.
Both Measat and Arabsat spoke of the opportunities to develop business in Africa.
Paul Brown Kenyon, COO of Measat said, “We are looking at Africa. We are now in the process of developing that business as a separate entity. We are now in a significant growth phase.”
Mohamed Youssif, CCO of Arabsat said the company was selling “a lot of C-band capacity in Africa.”
While some operators are looking at entering new markets, traditional video services will still continue to be a key driver in their home markets.
“We think there are a lot of opportunities to grow the market across the entire region (Asia),” said Brown Kenyon. “We still see growth across most of the major markets. There is still significant telecom growth. Pay-TV in Asia is still at an early stage. We have supported DTH in Malaysia since 1996. Astro could offer a 200 channel service over the next few years. We are supporting platforms in India and Malaysia. There is significant growth in video distribution. Some markets are open. Some are closed. But, there is a general trend to open up markets.”
Paul Sheridan, head of satellite at Optus, added to the discussion.
"We think there is an opportunity for satellite. We see HD and broadcasters continuing to drive growth into our business. For our business, HD is the primary growth opportunity,” he said.
"Market Growth and Innovation in Satellite Manufacturing," the other main panel for the day featured top satellite manufacturers cautiously optimistic.
John Celli, president of Space Systems/Loral commented, “I don’t see any downturn. The market will be driven by replacement satellites. There are still other markets from a satellite applications point of view.”
Celli added that his company has not seen any recent decrease in RFPs and RFIs.
“However, some of the contract awards may be delayed because of economic conditions. I think the market is still robust even if there are some delays,” he added.
Amer Khouri, vice president of marketing and business development for Orbital Sciences Corp. agrees with Celli, making his own observations.
“I do not see a downturn,” said Khouri. “But, I do think operators are more open to partnerships and joint ventures now.”
While FSS operators criticized the cost of launch services, there were also murmurings about the costs of satellites. In response to this criticism, Evert Dudok, CEO of EADS Astrium said, “There has been a lot of cost cutting done. Even with that cost cutting, it is still difficult. We are very selective in the contracts we take. We want to give our shareholders air to breathe. To provide a satellite with 15 years of performance, requires special requirements and qualities.”
Celli added, “I don’t believe there is satellite inflation. Frankly. I have not seen prices getting out of control. All of us have to take margins that appeal to our shareholders.”
Marshall Byrd, vice president and general manager of LMCSS added, “It is about risk and reward for this industry, and there can seem a lot of risk for very weak rewards. We try to bring down the costs as best we can.”
Most satellite manufacturers agreed that there were still a healthy number of RFPs out there although Reynald Seznec, CEO of Thales Alenia Space believes some of these RFPs are now getting more sophisticated.
“Proposals are getting more and more sophisticated,” said Seznec. “Clients want to go hybrid and can have satellites dedicated to both the government and commercial markets.”
Khouri added, “In small and medium satellites, there are a lot of RFPs. There are at least 3-4 RFPs in Asia right now. Last year, the start of the year was very busy and the second half slowed down. The pace this year has been very constant.”
Byrd also commented, “We have three out RFPs out and two RFIs out. That is normal traffic for us. We won’t chase everything.”