In 2002, AsiaSat saw its revenues decline slightly to HK$951 million ($122 million) from HK$969 million ($124.3 million) in 2001. Profits also dipped to HK$555 million ($71.2 million) from HK$563 million ($72.2 million). With Asian economies still struggling, the declines were to be expected. At the same time, AsiaSat remains one of the better positioned operators in the region.

The Hong Kong-based satellite operator is likely to see flat growth this year. AsiaSat CEO Peter Jackson told Interspace that revenues are “very dependent” on the economies of the region. “One of the advantages we have is that we cover multiple countries, so if one or two start to improve, it will lead to improved transponder utilisation,” he said.

The operator is facing a testing year, particularly with the launch of its AsiaSat 4 satellite. The pressure will be to sell capacity on the satellite in tough market conditions.

The satellite with 28 C-band, 16 Ku-band transponders, and four Hong Kong broadcast satellite service (BSS) transponders, is scheduled to be launched next month. The satellite will cost a total of $224 million, including the insurance premium. With the recent failures of Astra 1K and the Eutelsat HOT BIRD 7 satellite, AsiaSat will be hoping for a successful launch. Jackson told Interspace the operator has already made preparations in case there is a launch failure. He stressed that the company would not suffer any financial difficulties as a result of such a failure.

“We do have coverage of Australia and China through AsiaSat 3S, so we are really looking at AsiaSat 4 for growth basically in those two markets in Ku-band, but obviously the one that would be very difficult to replicate would be BSS frequencies for Hong Kong and southern China. We have looked at the impact financially [of a launch failure], and it will only be minimal. Obviously, if the economy turns around and we saw growth in those two markets, then the impact would be more significant,” Jackson said.

He continued, “When you go out beyond 2004, and if we don’t have a replacement up, that would be more serious. In the short-term, there would not be a big impact as we have spare capacity on AsiaSat 3S.”

In terms of pre-sales of capacity, AsiaSat has already signed a deal with Australian telecom provider Telstra. Jackson revealed that other deals have also been done. “We have got some other sales, which we are not making public at the moment. Any pre-sales in this market can be viewed as a positive. We are talking fairly low percentage numbers in the first part of the year.”

The satellite also has considerable Ku-band capacity. So, will AsiaSat struggle given the excess capacity in the region? Jackson says no. “There is a lot of spare Ku-band capacity covering India; we are fortunate that we have no dedicated India Ku-band capacity. China also has spare Ku-band capacity but not as much as India. In both markets, the quality of the transponder is starting to make a difference as customers start to realise that not all capacity is the same. Good quality C-band, with very large geographic coverage is quite tight in Asia.”

Utilisation Rates

One thing that AsiaSat 4 will do is reduce AsiaSat’s utilisation rates across its fleet. In 2002, the company had a disappointing utilisation rate of 64 per cent across its fleet, a one per cent reduction from 2001. AsiaSat 4 will increase AsiaSat’s capacity by around 50 per cent, and with sales on the satellite likely to be difficult, utilisation rates are likely to decline before they grow.

The challenge for AsiaSat in the short-term will be to make AsiaSat 4 look attractive to new customers and new entrants coming into the market. The operator has stated on a number of occasions that it does not want to get involved in a price war. It makes no bones about the fact that others offer capacity at discounted rates, but believes customers in the region will pay for quality and dependability. Jackson comments, “I think we will still get a premium. The test will be AsiaSat 4, where you have no neighbourhood and you have no ground segment looking at you. You have to start from zero. Customers are starting to realise you get what you pay for and cheap quality is sometimes cheap because it has problems or does not have the power that you need.”

Leveraging Financial Strength

With no debt, AsiaSat could be ready to make acquisitions in the region. Jackson said the operator would consider an acquisition “if we could find a competitor out there who had reasonable customers on board in terms of utilisation rates. We would buy customers. I am not sure we would buy an empty satellite.”

The operator aims to concentrate on the broadcast markets, rather than the point-to-point communications market. Jackson believes the demands for more diverse programming will increase once economies pick up in the region. In areas with free distribution and no regulation to restrict service, a dramatic increase in the number of television channels is expected once the economies pick up, he said. “A lot of countries in Asia are very badly served in terms of programming. There are two areas where there could be growth. You have soap operas, sport and movie channels, and then you have niche programming such as the National Geographic. If the economies of these countries improve, things will pick up shortly afterwards,” he said. –Mark Holmes

(Contact: Winnie Pang, AsiaSat: e:mail: [email protected])

Operational Highlights:

• AsiaSat’s in-orbit satellites continue to operate well
• Transponder utilisation rates: 36 MHz C-band at 78% and overall at 64% at year end
• AsiaSat 4 satellite launch imminent, anticipated to be in its final position of 120 degrees East Longitude by the end of April
• New Tai Po earth station on schedule for operation in the second half of 2003

Source: AsiaSat