AsiaSat Revenue Down Sharply for 1st Half of 2014

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PONTE VEDRA, Florida — Satellite fleet operator AsiaSat of Hong Kong on Aug. 21 reported sharply lower revenue and operating profit for the six months ending June 30 compared to a year ago and warned investors that full-year 2014 results will not show much improvement over the first half.

Confirming a profit warning issued in July, AsiaSat said a combination of lower prices on certain contracts, nonrenewals of others and the reduced demand by the U.S. military in the Middle East resulted in lower overall satellite transponder revenue.

In a statement to the Hong Kong Stock Exchange, AsiaSat Chairman Sherwood P. Dodge said investors should view 2014 as a transition year as the company places new satellites into operation and broadens its coverage. A turnaround in performance as the new capacity enters service should be visible in 2015, he said.

For the six months ending June 30, AsiaSat reported total revenue of 693.6 million Hong Kong dollars ($89.5 million), down 9.6 percent from the same period a year ago. Operating profit, at 354.6 million Hong Kong dollars, was down 26 percent.

Not all the news was bad. Backlog grew 11 percent, to 4.2 billion Hong Kong dollars, from where it stood on Dec. 31. The fill rate on the company’s four satellites in orbit during the first six months of 2014 was 76 percent as of June 30, up from 74 percent on Dec. 31.

AsiaSat operated four satellites as of June 30. AsiaSat 8 was launched Aug. 5 and AsiaSat 6 is scheduled for launch in the coming weeks aboard a Space Exploration Technologies Corp. Falcon 9 rocket. AsiaSat 6 will be operated from 120 degrees east, a new orbital position for AsiaSat, as part of a partnership agreement with satellite fleet operator Thaicom of Thailand.

AsiaSat 9, now under construction, is scheduled for launch in late 2016 or early 2017.

AsiaSat has long positioned itself as a company with a long-term view that will launch satellites well before they are needed so as to be able to assure service continuity in the event of a launch failure.

Like other operators in the region, AsiaSat is counting on emerging demand in China to force that nation to seek non-Chinese transponder capacity.

For the six months ending June 30, AsiaSat’s business in mainland China and Hong Kong was down 14 percent, to 354.6 million Hong Kong dollars. AsiaSat 6 is designed to better position the company in the Chinese market.

The company said transponder demand trends in Asia remain positive in the medium term as more nations allow multiple direct-to-home (DTH) satellite broadcasters to develop a business, creating a larger addressable market for satellite operators like AsiaSat.

New DTH platforms in Pakistan, Myanmar, Sri Lanka, Bangladesh and Indonesia — a nation that is expanding its own domestic satellite capacity — should boost demand as many move from standard- to high-definition formats that require more satellite bandwidth.

Longer term, AsiaSat said, “we believe that 4K [ultra-high-definition television] will be widely adopted” in Asia.