AsiaSat Reports Rising Profit, Remains Bullish on Satellite TV Market
PARIS — Satellite fleet operator AsiaSat of Hong Kong on March 22 reported an 18 percent increase in revenue and a 26 percent increase in operating profit for 2011 compared to 2010 and said it remains optimistic about the near-term potential of its core direct-broadcast television markets.
The company said its SpeedCast subsidiary, which provides two-way broadband links to corporate and government customers, posted a 16 percent increase in revenue for the year and now accounts for about 14 percent of AsiaSat’s total sales.
In a submission to the Hong Kong Stock Exchange, AsiaSat said it has agreed to sell its 50 percent stake in the money-losing Dish-HD Asia Satellite venture to an unnamed buyer for one Hong Kong dollar.
The joint venture with EchoStar Corp. of Englewood, Colo., which began operations providing satellite television in Taiwan in June 2010 and has never realized its promise, widened its losses in 2011. The sale was prompted by “a prolonged period of underperformance,” AsiaSat Chairman Ju Wei Min said in a statement.
The sale of AsiaSat’s share of the joint venture is awaiting regulatory approval and is expected to close within a year, AsiaSat said.
In a March 9 filing with the U.S. Securities and Exchange Commission, EchoStar said it had sold 95 percent of its stake in the joint venture “for a nominal consideration” after investing $18 million in it and providing an $18 million line of credit to permit Dish-HD Asia Satellite to purchase television set-top boxes from EchoStar.
The EchoStar line of credit will end once the sale is completed. EchoStar said that as of Dec. 31, Dish-HD Asia Satellite still had $10 million available to it under the credit line, which “if advanced would be subject to our evaluation for other-than-temporary impairment.”
For the 12 months ending Dec. 31, AsiaSat reported that revenue increased by 18 percent, to 1.72 billion Hong Kong dollars, or $221 million using exchange rates at the end of the year. Operating profit was 1.05 billion Hong Kong dollars, an increase of 26 percent from a year earlier.
AsiaSat operates four satellites in orbit. The newest of those, AsiaSat 7, was launched in November and entered service in February. The company has two more satellites on order — AsiaSat 6 and AsiaSat 8 — both being built by of Palo Alto, Calif., and scheduled for launch in the first half of 2014 aboard Falcon 9 rockets operated by Space Exploration Technologies of Hawthorne, Calif.
AsiaSat in December agreed to sell half the capacity of AsiaSat 6 to fleet operator Thaicom of Thailand for $171 million to be paid over the satellite’s 15-year service life.
Not including AsiaSat 7, the AsiaSat fleet was 82 percent occupied at the end of 2011. The company has been able to increase its fill rate steadily in recent years, going from 65 percent in 2009 to 73 percent in 2010.
“Economic turbulence in various parts of the world appeared to have little impact on the majority of our Asian customers,” Ju said in his statement, adding that “a surge in demand for capacity” for satellite television, especially bandwidth-hungry high-definition programming, is the principal driver of the growth.
In recent years the Indian market for satellite television has provided AsiaSat with a large opportunity even with India’s regulatory restrictions, which despite their relaxation continue to impose hurdles to non-Indian fleet operators.
Ju said India remains a key focus for the company despite the threat of a large tax penalty that the Indian government is weighing. AsiaSat has protested the tax assessment, but Ju said legislation now before the Indian legislature is not promising.
Regulatory restrictions favoring China’s national satellite broadcaster have also restricted AsiaSat’s business in mainland China. But the company increased revenue from China by 28 percent in 2011, to 231 million Hong Kong dollars.
Revenue from Hong Kong-based customers decreased by 3 percent in 2011, to 234 million Kong Kong dollars, AsiaSat said.