AsiaSat says booming regional economies outweigh oversupply fears
WASHINGTON — Regional satellite operator AsiaSat of Hong Kong expects the high growth rates of several Asian economies will outlast the current oversupply of satellite capacity and will reinforce the operator’s business case in an increasingly crowded market.
AsiaSat reported 2016 revenue of 1.27 billion Hong Kong dollars ($163.73 million), a 3-percent decrease the company said was due to the conclusion of a short-term contract on AsiaSat-3S, which is in an inclined orbit. Were it not for the end of that contract, annual revenue would have instead grown by about 3 percent, the operator said in an earnings statement released March 15.
“With regional economic prospects as estimated by the [International Monetary Fund], World Bank and [Economist Intelligence Unit] that range from 6.8% [gross domestic product] growth for China in 2017, 7.3% for India and forecasts that hover around 6% for the majority of South and Southeast Asia (with Myanmar outstanding at 8.5%), as an innovative service provider AsiaSat has a positive commercial outlook despite the short-term negatives such as the current capacity over-supply.”
As in earnings statements from previous years, AsiaSat reported pressure from oversupply as more than a dozen regional operators — not to mention global operators — field telecom satellites for Asia and the Pacific. AsiaSat Chairman Ju Wei Min reiterated the challenges associated with competing in a crowded market of both private and state-owned operators.
“The market instability resulted from a global oversupply of satellite capacity of all kinds and generally uncertain economic conditions,” he said in a statement. “We recognise the need to continue to manage closely the pricing pressures on data services as well as compression improvements for video distribution which to some extent neutralise the benefits of the increased demand generated by mobility applications and video format upgrades.”
Ju described AsiaSat’s nearly flat revenue for 2016 as “disappointing,” but cautioned that the company’s financial performance “should be viewed against a backdrop of globally unstable market conditions and the impact of disruptive new technologies.”
AsiaSat tallied 99 transponders used across its core fleet of four satellites — AsiaSat 4, AsiaSat 5, AsiaSat 6 and AsiaSat 7 — during 2016, an increase of three transponders and totalling a 67-percent average fill rate. The operator did not count AsiaSat-8, which is on loan to Israeli-satellite operator Spacecom for $22 million a year, in its fill rate, saying that the satellite now “no longer serves AsiaSat customers directly.” Spacecom is only using AsiaSat-8’s Ku-band payload (ignoring the Ka-band payload) but still rebranded the satellite as Amos-7 after relocating it to 4 degrees west. AsiaSat says the ageing AsiaSat 3S satellite at 146 degrees east still has the means to provide services to customers for short-term contracts from its inclined orbit before being retired.
AsiaSat said that AsiaSat-9, a replacement satellite for AsiaSat-4 under construction by Space Systems Loral in Palo Alto, California, is scheduled to launch late this year. AsiaSat-9 introduces a Ka-band high-throughput payload to the mix along with replacing AsiaSat-4’s C- and Ku-band capacity.
Ju said AsiaSat will “continue to evaluate opportunities to develop its HTS Ka-band capabilities” while monitoring and pursuing new business opportunities in ultra-HD broadcasts and Internet of Things connectivity services. He said AsiaSat is also pursuing more business opportunities with niche direct-to-home broadcast platforms focused on smaller emerging markets that often need local-language services.
Profits for 2016 attributable to owners decreased by $1.29 million because of lower revenue and higher depreciation charges. AsiaSat said it is continuing to invest in streamlining its sales structure and to invest in new telecommunications infrastructure where needed.
AsiaSat reported new and renewed contracts worth $240.72 million for 2016, and contracts on hand up 16 percent year over year to $523.54 million.