Thuraya Chief Sees FSS Partnership as Path to Global Reach

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PARIS — Mobile satellite services provider Thuraya Telecommunications Co. Chief Executive Samer Halawi on March 27 said his company, which this month published its financial results for the first time, likely will decide this year on a partnership strategy — perhaps with a fixed satellite services (FSS) operator with Atlantic Ocean coverage — to give Thuraya global reach.

He said Thuraya, which in 2013 began commercial operations in China, Australia, the Philippines, Japan and Taiwan, has no more regulatory hurdles to clear in its 160-nation region covered by its two large satellites in geosynchronous orbit.

Dubai-based Thuraya reported $122 million in revenue in 2013, up 15 percent over 2012, and is forecasting its revenue will surpass $200 million by 2018.

EBITDA, or earnings before interest, taxes, depreciation and amortization, was up 29 percent, to $36 million, the company said in a statement emailed March 25, adding that among the principal mobile satellite services providers, it is the least indebted as a multiple of EBITDA after it restructured its debt.

Dubai-based Thuraya, which operates two large satellites in geostationary orbit, at 44 degrees east and 98.5 degrees east and serves customers in 160 nations, said its high-margin data revenues rose 26 percent in 2013 over 2012, while voice revenue rose 14 percent.

Thuraya said services revenue accounted for 73 percent of the total in 2013, with equipment revenue at 27 percent.

Thuraya has been working to turn around its business since 2011, notably with an expansion into the Asia-Pacific region. It launched services in Japan, China, Taiwan, Australia and the Philippines last year. Revenue from the region, which was just $3 million in 2010, was $18 million in 2013.

Thuraya said its 15 percent revenue increase in 2013 followed a 4 percent increase in 2012. “This growth for two consecutive years now was achieved at a time when troop withdrawal and other factors have caused our competitors to report declining revenues,” Thuraya said in a statement. 

Halawi has said the company is crafting a strategy in which it partners with fixed satellite services fleet operators, whose satellites operate mainly in Ku- and C-band, for access to the maritime market.

“We are now looking to take Thuraya to the next stage of its development, possibly working with a new strategic partner — commercial, financial or a combination of both — to enable the business to grow at a still faster rate… and to finance unique next-generation capabilities,” the company said.

In an interview, Halawi said Thuraya’s current satellite footprint covers 60 percent of the world’s maritime traffic. Bringing the remaining 40 percent into its portfolio will require partnering in one form or another.

Halawi said Thuraya’s shareholders wanted proof of the company’s growth potential in the past two years and withheld new cash investment pending proof that Halawi could make good on his promise of a turnaround.

With the business now on a more-stable footing, the shareholders are more inclined to invest in growth, he said. 

“We cover two-thirds of the world but we would like to spread our costs over a larger revenue base and cater to customers whose businesses are global in nature,” Halawi said, referring mainly to maritime customers. Thuraya as yet has not made aeronautical coverage much of a priority.

Several operators of Ku-, C- and Ka-band satellite systems, which historically have focused on land-based coverage, are now designing satellites with beams over the oceans to capture the growing maritime and aeronautical demand for satellite connectivity.

Without tipping his hand, Halawi said a tie-up with an operator such as Intelsat of Luxembourg and Washington, which is investing heavily in beams over the oceans, would be a logical next step.

Similarly, ViaSat of the United States and Eutelsat of Paris have large Ka-band broadband satellites with coverage over the Atlantic sea routes, and ViaSat is building a new satellite that will  fill in gaps in the current Atlantic Ocean footprint.

“The Americas is currently a missing area for us, and South America is an interesting market,” Halawi said.  

 

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