AsiaSat reports flat revenue but uptick in Chinese mainland business
HALIFAX, Nova Scotia – Satellite fleet operator AsiaSat of Hong Kong on Aug. 17 reported flat revenue for the six months ending June 30 despite increased business in China following Chinese government regulatory approvals.
AsiaSat said it expected no material improvement this year for itself or other satellite operators in Asia, a region AsiaSat Chairman Ju Wei Min characterized to investors as “a challenging market environment characterized by increasing competition, fierce pricing pressure and the overall downturn in the global economy.”
AsiaSat had long been positioning itself to harvest the growing Chinese demand for high-definition television broadcasts but had been slowed by regulatory barriers. These were lifted and AsiaSat now has increased landing rights on the Chinese mainland.
For the six months ending June 30, AsiaSat reported revenue from China, not including Hong Kong-based business, of 156.1 million Hong Kong dollars ($20.1 million), up 4.1 percent over the same period a year ago.
The company said its AsiaSat-6, launched in mid-2014 and stationed at 120 degrees east, is well-placed to be a major player in the Chinese video market as high-definition television (HDTV) catches on in China. HDTV broadcasts use more satellite bandwidth than standard digital programming, which even after signal compression means more satellite capacity leased per HDTV channel.
AsiaSat operates six satellites in orbit, including the aging, inclined-orbit AsiaSat-3S, which recently has been generating revenue for AsiaSat through a short-term lease to other fleet operators. AsiaSat-3S had been stateioned at 150.5 degrees east to maintain regulatory rights for Indonesia. Indonesia’s BRI Bank launched BRIsat in June into that slot.
AsiaSat-9, under construction by Space Systems Loral of Palo Alto, California, is scheduled for launch in the first half of 2017 to replace AsiaSat-4 at 122 degrees east. In an Aug. 17 submission to the Hong Kong Stock Exchange, AsiaSat said construction remained on track for delivery in early 2017.
The company is counting on AsiaSat-9 to meet the future market for ultra-high-definition television programming, which AsiaSat said would not deliver much revenue in the near term but would support revenue growth later on.
For the six months ending June 30, AsiaSat reported revenue of 640 million Hong Kong dollars, flat from a year ago. Operating profit, at 262.8 million Hong Kong dollars, down 16 percent from a year ago.
But a one-time tax credit of 41 million Hong Kong dollars helped maintain net profit at 249 million Hong Kong dollars, unchanged from a year ago.
The company said backlog held steady at 3.54 billion Hong Kong dollars on June 30, the same level as reported as of last Dec. 31.
AsiaSat said it had 103 transponders sold or leased as of June 30, up from 96 on Dec. 31. But because of the addition of AsiaSat-6 and AsiaSat-8 in the second half of 2014, the fleet’s fill rate dropped to 60 percent from 72 percent.
The company said it had set aside funds to protect against an adverse Indian government tax ruling, a long-running dispute between Indian authorities and several non-Indian fleet operators about tax liability to satellite fleets doing business in India.
AsiaSat gave no indication that the dispute, which has been going on for years, is near a resolution.