Since being founded by a consortium of national telecommunications operators in 1997, Thuraya Satellite Telecommunications Co. has built itself into a $1 billion regional mobile satellite telecommunications satellite system. Nearly a decade later, the company is positioning itself for an initial public offering (IPO) while preparing to expand beyond its primary global system for mobile (GSM) business.

“Our market in the Middle East is mainly in Iran, Saudi Arabia and Iraq,” said Yousuf Al Sayed, CEO of Thuraya. “We can develop them further in a similar way in which GSM has evolved by providing new value-add services. The next generation of handhelds will be able to carry multimedia services. You will be able to download Java programs using Java support on these new handhelds. There will be camera capabilities, Infrared, Bluetooth, GPS as well as MP3. So, we are trying to spice it up a little bit and make it similar to GSM.”

In an interview, Al Sayed talks to Satellite News International Editor Mark Holmes about the where Thuraya is in terms of a potential IPO as well as its plans to develop the mobile satellite communications market.

Satellite News: What are the major challenges for Thuraya in 2006?

Al Sayed: The major challenges are the expansion of terrestrial services in our distribution areas. This means we have to accelerate development of new distribution areas. The African market was a key focus for us this year and will continue to be next year. We are working hard to improve our position there with the introduction of various new services including new and lower tariff services, high-speed data services, maritime services as well as the expansion of existing public call office services.

Satellite News: What is the status of your planned IPO?

Al Sayed: The idea of restructuring Thuraya’s capital and even going public is not new. We have been evaluating this option for some time now. What we want is to take this one more level up this year. Work has already started on the updated plan concerning Thuraya Capital restructuring option including detailed analysis of why we want to take it on at this stage. We hope to complete this before the end of this year. No financial advisors have been appointed yet; but if the outcome points in that direction, then we intend to appoint advisors early next year. I cannot say at this stage what the exact timeline will be and when we will have the capital restructuring process started.

Satellite News: Have you met your subscriber goals?

Al Sayed: At present the subscriber count is 250,000. Our target is to reach 280,000 subscribers by the end of the year. We are still trying to get there, but we are happy with the number of subscribers we have achieved as it is sufficient for achieving our financial targets in terms of revenues and net income.

Satellite News: What impact has the instability in Iraq had in terms of your ability to generate revenues in that market?

Al Sayed: Iraq, in early 2003, became a hotspot for Thuraya. In 2004, it was the number one territory for us in terms of revenue generation, but now it has declined out of the top five markets. It is now back to its normal size. In 2003, there was no other means of mobile communication except satellite so Thuraya was able to take advantage of that situation. Now, GSM is everywhere. The level of usage has gone down, but this was anticipated. At the beginning, the revenues started to increase, late 2003, they peaked and in 2004 it started its journey south.

Satellite News: You launched services in Kuwait this year. How do you view the opportunities for Thuraya in this market?

Al Sayed: We have been providing communication services in Kuwait earlier through MTC-Vodafone. Kuwait is more of a vertical market where more businesses and companies are our subscribers. We also have some government usage there. Kuwait market is mature now and we are now maintaining our presence and growth by promoting our value-added services.

Satellite News: What other areas of the world are you targeting?

Al Sayed: We have done our homework in Africa and some other countries, the fruit of which is expected early next year. As deregulation issues are solved and licences are issued in more countries, we can run the network more efficiently. Of course, by also going to Asia, that will open up new opportunities taking advantage of the synergy created by the combined coverage. There are users who want the two different regions to be connected.

Satellite News: When do you plan to invest in new satellites?

Al Sayed: These are parts of updated plans we are putting together addressing our requirements until 2010. One of the main issues facing us is the expansion of services into Asia, as well as preparing a back-up satellite for both coverage areas. Also, we want to add new mobile satellite technologies to the mix.

Currently, a third satellite, Thuraya 3, is under construction and expected to be delivered before June next year. This is the satellite we are planning to use for Asia. At the same time, we need a back-up satellite for our expanded coverage. We have maintained the policy of keeping a ground spare till now. But this has to change to an in orbit spare. We will decide on this before the end of the second quarter next year. Spare ground communication capacity for initial introduction of Thuraya services in Asia is available today. A majority of currently existing services will also be provided in our Asia coverage except for high speed data which will be introduced at a later stage. The service offerings will be tailored to meet Asian market requirements.

Satellite News: What are your plans in terms of launching ThurayaDSL?

Al Sayed: It was a delayed service because we had an agreement with another satellite operator to provide data services on our system. Although the delay was not part of the deal, we did not think it was correct to launch a service to compete with our customers. Once the agreement expired end of last year, the postponement reasons have disappeared. Our target for this service is to reach 4,000 to 5,000 users by the end of next year. The need for this service is driven primarily by business and media.

Satellite News: What will the market look like a decade from now?

Al Sayed: If you look at the distant future, I think mobile TV and radio will come to our area either from a company like us, others from Europe or even from the [United States]. I can’t say at this stage what will happen, but, we are very much studying this and looking at the possibilities of having mobile radio and TV together on one platform operating using S-band. We know there are some efforts taking place in Europe in this regard, but Thuraya will not move forward unless it can prove it can be really efficient here, given our experience with L-band. The L-band spectrum is limited, and too many operators are sharing this resource and it is not used efficiently. It requires very efficient and innovative technologies for maximizing reuse potential.

(Ebrahim Khalil Ebrahim, Thuraya, e_ebrahim@thuraya.com)