Ground Equipment Maker Gilat Expects To Shake Off Revenue Slump Soon

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Gilat Chief Executive Erez Antebi said the company forecasts “a healthy pipeline of HTS networks that are planned for launch. We are working to be the ground equipment provider for many of these opportunities." Credit: Gilat
Gilat Chief Executive Erez Antebi said the company forecasts “a healthy pipeline of HTS networks that are planned for launch. We are working to be the ground equipment provider for many of these opportunities.” Credit: Gilat

PONTE VEDRA, Fla. — Satellite ground equipment provider Gilat Satellite Networks reported lower revenue for the three months ending June 30 compared with last year but said its business, both military and civil/commercial, is on the upswing and should improve markedly by late this year.

Petah Tikva, Israel-based Gilat said its cost-cutting measures, put into place in 2013 to meet an expected slump in revenue, are showing their effects in the form of reduced operating losses and increased gross profit.

Gilat’s product lines include small antennas to be fitted on unmanned aerial vehicles for satellite links among military customers, and backpack-portable terminals for soldiers, in addition to its larger business of providing ground terminals for rural telecommunications access and high-speed Ku- and Ka-band broadband networks.

The increased use of high-throughput satellites (HTS), generally meaning satellites with large numbers of spot beams permitting frequency reuse and offering multi-gigabit-per-second throughput, is viewed by Gilat and its competitors as an opportunity in just about every region of the world.

In an Aug. 13 conference call with investors, Gilat Chief Executive Erez Antebi said the company forecasts “a healthy pipeline of HTS networks that are planned for launch. We are working to be the ground equipment provider for many of these opportunities. A few could be decided in 2014.”

Gilat has sought to distinguish its product offering — ground gear that works across platforms and is not tied to a given satellite technology — from two of its largest competitors, Hughes Network Systems and ViaSat Inc., both of the United States. Hughes and ViaSat specialize in turnkey systems including satellite capacity and the ground segment.

Gilat thought it had landed a large contract in Russia in 2011 with a proposed Ka-band satellite project being planned by Russian government telecommunications providers. Managed by Rostelecom’s RTComm, the project has since been suspended. But both of Russia’s satellite fleet operators have announced plans of their own and have ordered Ka-band satellites for consumer and business broadband access.

Moscow-based Russian Satellite Communications Co. (RSCC) on Aug. 19 said it has contracted with a half-dozen Russian service providers to deploy Ka-band broadband in central and eastern Russia starting in 2015.

RSCC has been testing the Russian appetite for consumer satellite broadband by leasing capacity on Paris-based Eutelsat’s Ka-Sat satellite, which is located at 9 degrees east and covers western Russia in addition to Europe.

RSCC said it has loaded some 5,000 subscribers onto the Ka-Sat service and now expects to add 20,000-23,000 subscribers per year, starting in 2015, when two RSCC-owned satellites are deployed for consumer broadband.

RSCC’s Express-AM5 satellite, located at 140 degrees east, will debut the RSCC satellite Internet service in early 2015, followed by the Express-AM6 satellite tentatively scheduled for launch late this year.

Ka-Internet is one of the service providers contracting with RSCC to provide the service.

“The latest Ka-band technologies improved consumer quality, [with higher] network access speed and a reduced cost of equipment, exposing VSAT [very small aperture terminal] services to more and more people,” Ka-Internet Chief Executive Vitaly Vashkevich said in an Aug. 19 statement. Ka-Internet has been testing consumer broadband through RSCC’s lease of Ka-Sat capacity.

“We appreciate colleagues from RSCC for the opportunity to start operating in the Ka-band long before the first Russian satellite with Ka-transponders was put into service in the orbit. Now we don’t have a shadow of a doubt about its operability in Russia’s environment. We are looking forward to the RSCC Ka-band satellite network being launched by the Express-AM5 spacecraft.”

One of Gilat’s largest successes in consumer broadband has been in Ku-band, not Ka-band, as part of the Australian government’s ambitious broadband deployment program. Program manager NBN Co. has ordered two large Ka-band satellites but is using Thailand-based Thaicom’s IPStar spacecraft in Ku-band. Gilat provides the ground terminals for the Australian consumers of IPStar.

NBN recently confronted more demand for interim capacity than it had predicted, but Antebi said during the conference call that he expects no major new orders from NBN to deploy to new sites.

Gilat and Thaicom are deploying Gilat hardware for IPStar services in Indonesia as well.

In Europe, Gilat is providing ground hardware for consumers using Luxembourg-based SES’s SES Broadband service network, and it recently signed Swisscom as a partner.

Like other providers of technology to the U.S. Defense Department, Gilat has witnessed pressure on sales following troop withdrawals from Iraq and Afghanistan and the pressures on the U.S. federal budget.

Antebi said the company is now finding more opportunities for military sales outside the United States, notably in Latin America and Asia. He said Gilat had booked an order for a ground control station in an unnamed Latin American nation that will use it to connect unmanned aerial platforms to the core terrestrial network.

Antebi said Gilat is providing its BlackRay terminals for Lockheed Martin’s Fury unmanned aerial vehicles.