Broadband Business a Bright Spot for Thaicom in 2010

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PARIS — Satellite fleet operator Thaicom of Thailand on Feb. 17 reported a sharp increase in revenue from its IPStar satellite-broadband service in 2010, offsetting a revenue decline in its conventional satellite transponder lease business due to the Thai baht’s appreciation against the U.S. dollar.

Thaicom said its decision in 2010 to switch to an open-platform business model for IPStar, permitting other hardware builders to produce IPStar user terminals, appears to be paying off. IPStar service revenue in 2010 grew 38 percent over 2009.

IPStar offers consumer broadband service in Ku-band, not the Ka-band frequencies used by satellite broadband providers in the United States and planned by several operators in Europe and Australia. Thaicom officials have said Ku-band frequencies are already challenging enough during the Asian monsoon season, and that Ka-band’s sensitivity to rain would be an issue.

Thaicom said its IPStar bandwidth lease business reported revenue of 1.63 billion Thai baht ($54 million) in 2010, a 38 percent increase over 2009 as the company opened the service to multiple user-terminal and other ground hardware manufacturers. The fresh competition was felt by its own user-terminal business, whose revenue in 2010 fell by 26 percent, to 729 million baht.

Thaicom bandwidth lease revenue from its Thaicom 2 and Thaicom 5 conventional telecommunications satellites declined by 4.3 percent in 2010, to 2.24 billion baht. In a Feb. 17 document filed with the Stock Exchange of Thailand, Thaicom said the baht’s appreciation compared with the U.S. dollar hurt the conventional satellite business. Thaicom satellite capacity leases are often contracted in U.S. dollars, while Thaicom reports its revenue in Thai baht. The Thai baht appreciated by 9.6 percent against the U.S. dollar in 2010.

Thaicom’s 78.5 degrees east orbital slot in 2010 nonetheless expanded its satellite television lineup by 27 percent when measured in the number of television channels. The company said its satellites were hosting 359 television channels as of Dec. 31, 2010.

Thaicom’s DTV Service Co. subsidiary, which sells satellite television subscriber equipment, increased its unit sales by 59 percent in 2010, ending the year with 945,164 dish sets in customers’ hands. The DTV Service is included in Thaicom’s Internet and Media Services business line, which reported a 21.3 percent increase in revenue, to 649 million baht, in 2010 compared with 2009.

Thaicom’s IPStar was launched in 2005 but has faced numerous regulatory obstacles to beginning operations in several of its most promising markets, including India and China. Both these nations have cleared IPStar for entry and the service is expanding there. Thaicom opened two Indian gateways, in Delhi and Mumbai, in 2010 and said growth in the Indian market was substantial. Also growing was IPStar use in Australia, Japan and New Zealand, the company said.

The Australian market, which was crucial to IPStar’s early years of operation thanks to Australian government subsidies for broadband deployment, is likely to become more difficult in the coming years. Australia’s National Broadband Network project to deliver broadband access to all Australians includes two Ka-band satellites to link areas beyond the reach of terrestrial transmissions.

It remains unclear how and when Australia will phase out its current broadband subsidy program, or whether a future regulatory regime will favor the Australian service over IPStar.

Thaicom said the company’s 2010 financial results were torpedoed by the performance of its telephone business in Cambodia and Laos, mainly because of a regional price war among Cambodian cellular providers. Telephone revenue dropped by 32 percent in 2010, to 1.45 billion baht.

Total Thaicom revenue in 2010 was 6.7 billion baht, down 6.8 percent from 2009.

 

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