The CEO of Noorsat, a new satellite communications platform operator targeting the Middle East with a range of voice, video, data and Internet satellite communication solutions, has laid out an ambitious financial timetable for his company based on the growing market in the region.

Omar Shoter, CEO of Noorsat, a privately owned company in Manama, Bahrain, expects Noorsat to capture 30 percent of the market for such services in the Middle East and become profitable within two years. “We believe we will be major players,” he said. “We will introduce strong services with strong pricing. We think we will be the one-stop shop for global coverage for the Middle East bandwidth community. We think the fact you can gain the services through one dish will prove to be popular among consumers.”

Shoter’s aggressive financial goals are based in part on strong growth in the number of television channels in the Middle East and North Africa throughout the past two years, which has put pressure on existing transponder capacity and creates a market opportunity for a company like Noorsat. “More markets are being liberalized and we believe there is room for a third [satellite platform],” he said “We don’t have to start from zero as we have the rights for certain transponders and hotspots that exist in the region.”

Shoter feels Noorsat is launching its business from an advantageous position due to the company’s agreement with Eutelsat to provide capacity using satellites co-located at the Middle Eastern hot spots. The deal, finalized in September, gives Noorsat capacity on Eurobird 2 at 25.5 degrees East and on Hot Bird 4 at 7 degrees West and provides Noorsat with positions in the same orbital neighborhood as competitors Arabsat and Nilesat. “We have absolute rights to the frequencies – not just a lessee – and guaranteed capacity for a lifetime,” Shoter said.

Another reason for Noorsat’s ambitious profitability target is the company’s low cost structure, Shoter said. “Noorsat’s capital is very low, as we pay as we lease and sell as we lease,” he said. “Capital expenditure is kept at minimum, and the company is debt free.”

If Noorsat meets its profitability targets, an initial public offering (IPO) could follow soon after, Shooter said. As part of its business model, Noorsat will offer satellite television, telecoms, and ISP customers a shareholding opportunity in the form of private equity and a role in the management of the company’s affairs in anticipation of the IPO, he said.

Target Markets

Shoter believes digital television will “be a very strong growth driver” for Noorsat, which expects to capitalize on the free-to-air (FTA) market. “With three pay-TV platforms already in the market the opportunity for a new entrant is limited,” he said. “More FTA channels will be introduced in free media zones like Egypt, Jordan, Lebanon, Syria and Iraq where there are flexible regulations. Saudi Arabia’s FTA industry will also witness incredible growth. Noorsat offers an affordable broadcast solution for FTA channels.”

Nadine Usta, a media analyst at Arab Advisors, believes Noorsat has a good chance of being successful, because the dynamic nature of the television markets in the region has created room for another player. “The focus is on satellite television, and there are many channels that are popping up all the time, so I think there I definitely room in the market for a third player,” she said. “If it had not been Noorsat, it would have been someone else.”

Another strand to the Noorsat business plan are plans to begin transmission of a digital-TV service targeting Arab expatriates in Europe. Noorsat also has carrier agreements to extend this to the Americas and other continents. “We are looking for a distribution model to provide services for Arab ex-pats in Europe,” he said. “In terms of market share, we would hope to carry around 40 channels to cover our costs. Noorsat will provide a cost-effective distribution solution and it is quite a strong opportunity for us. We will also provide the service to customers in Asia, Latin America and Asia at a later date.”

Outside of television, Shoter believes a number of factors are aligning that will help satellite broadband services make an impact in the Middle East. “Many Arab countries are not well-serviced and most people who want high speed find it very expensive due to on-ground fiber optics,” he said. “Years ago many residents used to consider satellite broadband as very expensive and unreliable – but now this perception is changing and companies are doing very well.”

Internet penetration at home is limited in the Middle East, but Noorsat could still capture about 10 percent of the growing market in the first year of operations, Shoter said.

Competitors Welcome New Player

Other players in the digital television business in the Middle East believe Noorsat’s entrance into the market is a sign of a vibrant media market. “It’s an exciting time to be here as Middle Eastern media markets are continuing to grow dynamically and it’s not surprising that new entrants are seeking to establish themselves,” a spokesman for Showtime, a leading Middle East direct-to-home operator, said. “Time will tell whether Noorsat has the right business model. We at Showtime are very happy with our relationship with Nilesat, who are themselves expanding their capacity, and have no intention of moving but it’s always good to see more bandwidth suppliers coming to compete in the market.”

Michael Johnson, executive vice president of Orbit Satellite Television and Radio Network said Noorsat’s entrance of Noorsat will not affect its ability to pick up pay- TV subscribers. “On the contrary, competitive pressure on satellite transponder leasing prices should be reflected in improved first run, exclusive content, which in turn drives demand for pay-television,” he said. In addition to this, Orbit’s entire strategy of bundled services is particularly well synchronized to leverage on the objectives and capabilities of Noorsat.”

Overall Johnson believes the entrance of Noorsat will stimulate pay-TV in the region. “With the launch of Noorsat, I think the Middle East will see the emergence of mass market pay TV as people begin to understand the value of properly developed platform technologies,” he said.

–Mark Holmes

(Marianne Jumean, Hill and Knowlton (For Noorsat), Marianne.Jumean@hillandknowlton.com; Andrew Bone, Hill and Knowlton (For Orbit), Andrew.bone@hillandknowlton.com; Nadine Usta, Arab Advisors, e-mail, Nusta@arabadvisors.com; Vida Risq, Showtime, e-mail, Vida.Rizq@showtimearabia.com)