EXCLUSIVE - What is Next for Tom Choi?
When Tom Choi announced he was stepping down as Chief Executive Officer (CEO) of Asia Broadcast Satellite (ABS) last week, it sent shockwaves throughout the industry. Choi has been one of the most dynamic and outspoken CEOs in satellite over the last few years, not afraid to speak his mind on a variety of issues. His vision and success at ABS ultimately led him to winning Via Satellite’s Satellite Executive of the Year award in 2012 as he turned ABS into a global satellite operator with business in many countries around the world. It is probably fair to say there are very few CEOs like Choi in the industry. While he will still be involved at ABS as board director, it is going to take some time for the new CEO, whoever he or she may be, to emerge from Choi’s considerable shadow.
In this exclusive interview, Via Satellite caught up with Choi to find out his views of recent events, what happens next, and what the future holds for ABS.
VIA SATELLITE: Out of all of the operators I have covered, you have been synonymous with ABS given you were there at the start. How difficult was it to walk away from the CEO position?
Choi: I am extremely proud of what has been accomplished at ABS. We started with an idea to buy an in-orbit satellite which wasn’t needed by Lockheed [Martin] and later turned it into a six-satellite, global operator within 10 years with more than $100 million in annual revenue, no governmental backing at this late stage in the Fixed Satellite Services (FSS) sector maturity, and with almost no spectrum available to launch new FSS satellites. Moreover, we are competing head-to-head with the big three [operators] and winning in many cases.
As an example, in competition with Eutelsat we are taking over some significant portions of the video and live events business in Europe with ABS 3A. We fight every battle against O3B/SES Networks in the Pacific Islands — we win some and they win others but we are their biggest threat. Intelsat has lost so much business to ABS we have now become enemy number one. I respect each and every one of these companies immensely and I like the excellent people that are working there. However, business is business.
As such, ABS is in a great place now. I don’t see anything that would prevent ABS from taking a much bigger share of this industry. I am not walking away from ABS, as I am still a significant shareholder and board member. I will continue to contribute to the future success of ABS from the board and of course I will be supporting the existing management, the incoming CEO, and most importantly our very important customers. I always think of myself as an entrepreneur, a builder and an artist. If ABS could be compared to a masterpiece painting, I held the brush and the world was the canvas, yet everyone involved who worked at ABS as well as our investors, partners, customers and suppliers were the pigments, oils and the varnish, and we all made it happen together. As any artist would agree, you can’t keep working on a painting forever even though you are never completely satisfied — but you have to stop because there are other paintings to move on to. I believe this is how I feel about ABS at this stage.
VIA SATELLITE: When you look back, what do you think were your three biggest highlights or achievements while at ABS?
Choi: We raised over $200 million in condosat financing to build the biggest and most powerful satellite in Asia, ABS 2, as our first new satellite. Second would be our regulatory and coordination work where we filed and brought into use so many valuable orbital slots which allowed us to launch ABS 3A and ABS 2A and expand our business into the Americas and the Pacific Islands. The third would be the complete transition of our business from being a data-centric, low-cost bandwidth provider to that of a major provider of C-band cable TV and high-powered Ku-band Direct-to-Home (DTH) services around the world. This last accomplishment will ensure the long-term growth and viability of the company in the world of 5G, High Throughput Satellites (HTS) and Non-Geostationary Orbit (NGSO) systems because they will not substitute GEO FSS video services.
VIA SATELLITE: I remember doing an interview with Michel de Rosen after he announced he was leaving the CEO position of Eutelsat. He said he found it exhausting and that he no longer had the energy he felt Eutelsat needed. Would you say you are experiencing something similar?
Choi: It is quite the opposite. I have exuberance of energy and creativity still left in my tank so I am eager to pursue my other interests. It’s better now to let a good operational person come in and take over what we have built so I can focus my attention on other projects that I have been wanting to pursue.
VIA SATELLITE: Is your departure linked to the fact that ABS has not been sold despite being on the market? Are you disappointed you didn’t achieve this?
Choi: ABS has always attracted potential suitors. Even as we speak there are parties speaking with us; but closing a sale requires the buyer and seller to match each other’s expectations. Although it was not my responsibility to sell the company, it is not so simple to sell a FSS operator. The ticket price is not small; comprehending and understanding what a FSS satellite operator is and managing the business after the purchase requires a certain set of expertise which most companies nor investors do not have. The larger companies in our industry who would be natural buyers are having their own issues the past couple of years. I have been looking for Merger and Acquisition (M&A) opportunities but there are not too many companies of our size and scale available for a merger. I am certain we will find a successful exit sooner or later.
VIA SATELLITE: Do you believe you have taken ABS as far as you could? Do you believe you have accomplished all you set out to?
Choi: Yes, I believe ABS is at a level where we have achieved as much as we could. Many others have tried but failed. Perhaps we could have done more but if you only look at what you don’t have, you will never be happy in life. We spent more than $700 million in capital expenditure launching three brand new high performance satellites in ABS 2, 2A and 3A. All there is left to do is to fill out the transponders.
VIA SATELLITE: Given the influx of new players in the satellite industry and the new Low and Medium Earth Orbit (LEO/MEO) players that you have been outspoken against, what does the future hold for a player like ABS?
Choi: As I said many times before … I doubt the majority will ever launch and even if they do most will fail. Why? Let me ask a few questions: Where do they have market access, ground facilities to install their gateways, and most importantly who are their customers? They say they will fill the niche of serving the unconnected but they won’t be competitive to 5G. These are basic questions investors ask. This is why most will not get financing because they cannot answer them. As an example, which Export Credit Agency (ECA) is backing these crazy projects with no customers? Not a single one thus far. Look at what happened when the last company got funded on “hot air:” NewSat collapsed much to the chagrin of EXIM bank. I seriously doubt they want to relive that kind of experience again, this time on a much larger scale. So, the answer to your question is no, ABS will not be materially impacted.
I do admit that over time capacity that is available for data services will be more and more prevalent as existing GEO FSS operators launch their own version of HTS capacity. This is one of the reasons why ABS has shifted its focus to video and now video accounts for more than 50 percent of our business and more than 75 percent of our backlog. We will be continuing the trend of emphasizing video over data because our capacity is optimized for video. For data, it’s not HTS 1.0 or LEO 2.0 that will be competitive, so we shouldn’t even be trying until the satellites get much cheaper to build or they become 10 to 100 times more powerful for the same investment.
VIA SATELLITE: What does the future hold for Tom Choi? Are you looking at a future beyond the satellite industry?
Choi: I am staying on the ABS’ Board and supporting the company as I am a significant shareholder. We are working on several interesting initiatives and I plan to help the management and the new CEO fulfill them. In the long term, I am looking for a new challenge into other segments of the communications industry. There was an International Telecommunications Union (ITU) study made more than two decades ago that rural communities which received communications services almost always had their Gross Domestic Product (GDP) double. Thus, I believe it is altruistic to be involved in telecommunications to bring connectivity and broadband to people who don’t have it or make it available for a lower price to those that do have it.
My experiences creating Speedcast and ABS had a lot to do with working with industrial and enterprise customers. Now my interests have me seeking to create unique products for consumers. The concept of the iPhone seems so part of our everyday lives. It feels today as if we always had it but Steve Jobs only launched it 10 years ago. With the iPhone he changed the world and made Apple into the most profitable and biggest company. As most agree, Steve Jobs is one of the biggest role models of our lifetime. Thus, I am inspired to seek my own “iPhone Moment” to make something that everyone wants. It’s a bold challenge but I am willing to take it on.
VIA SATELLITE: Given you have been one of the most high-profile CEOs in the satellite industry in recent years, is the last we will see you in this particular spotlight?
Choi: One never knows what the future holds but as I said earlier I have other interests in consumer communications which is pulling my imagination and creativity forward in the near future. I have dedicated my career to space so in the intermediate term I believe I will be involved in future space initiatives including exploration and development. I am not bold enough to claim I will die on Mars or any other extraterrestrial body but I would like one of my legacies to be that I helped humanity’s expansion into outer space. Communications is one means to do it and there are others.
VIA SATELLITE: We have often talked about the satellite industry being at an inflection point. Are you positive for the state of the industry?
Choi: The FSS sector is going through a difficult period of lack of demand and over supply. This imbalance has happened several times before in our history. There is still strong growth left in video because most of the countries around the world do not have hundreds of TV channels and they don’t have DTH systems, so satellites that concentrate on this video segment will do fine. Others who are too exuberant in over-investing in the HTS 1.0 systems will soon find that their investments are not competitive for neither data nor video. So, as long as they do not waste their energies and capital on uncompetitive capacity, they will do fine. There are many interesting initiatives to make satellites more flexible and capable, but those will not yield fruit for a couple of years. Meanwhile, everyone should take care of their core business and concentrate on what they are good at: bringing TV signals to the billions. This is what ABS is doing. If others follow then I would be positive on the industry. However, since many of our competitors are rushing off to do NGSO and HTS 1.0 projects, I am worried for their future.
VIA SATELLITE: You were very outspoken in your criticism of the Intelsat/Intel collaboration recently. Do you believe 5G will be a great opportunity for satellite or are we entering a difficult period?
Choi: 5G will revolutionize the way we communicate because there will be so much bandwidth available to the handheld phone that new applications will arise that will take advantage of the minimum 100mbps speed. Everyone [in] 5G-enabled areas will have terabits of capacity each square kilometer. How will satellites (NGSO or GEO) compete against that? Outside the urban broadband zones, satellites will still continue to play a role in data communications in rural areas but they will lose ground as soon as terrestrial providers can bring broadband backbone connectivity. Thus, I say, over time, today’s satellites nor any of the planned GEO and NGSO systems will not have much role to play in 5G. We don’t know what tomorrow will bring and I hope that new satellites will bring hundreds of terabits of capacity.
VIA SATELLITE: What would you like to be remembered for in your time as ABS CEO?
Choi: I don’t want to dwell on vanities. I would wish ABS to continue to grow and have a lasting and successful future for the sake of its customers. I am certainly happy and proud that Speedcast under the leadership of Pierre-Jean Beylier has done so remarkably well since I left to create ABS. I wish nothing but the same outcome for ABS.