The long-awaited consolidation among satellite-fleet operators whose owners do not view their holdings as strategic imperatives may be on the way now that several have successfully issued stock and have a tradable security and have moved away from state ownership.
But for the moment, the merging of existing companies into a few, larger enterprises that would benefit from economies of scale in operations and in the purchase of satellites and insurance is not happening.
Recent developments in Argentina, Canada, Iran, Malaysia, Mexico, Nigeria and Turkey suggest that the desire by governments to have a domestic company managing domestic VSAT, television and other satellite services has not tapered off despite the continued soft markets that have reduced transponder prices in many regions.
In Turkey, the once-promising Monaco-based Eurasiasat has not been sold, but brought back into the fold of its majority shareholder, Turk Telecom, and the Turksat system. Turksat and Eurasiasat officials say that for the moment, the Turkish government is unwilling to spin off the Turksat satellite operator into a separate, non-government-owned company.
In Mexico, the long-suffering owners of Satmex, which has been in financial crisis for two years, continue to argue with the Mexican government about how to salvage the business. The Satmex 6 satellite, needed to secure Satmex’s position in the regional market, has been in storage at Europe’s Guiana Space Center launch site in French Guiana since late 2003 because its owner ran out of cash needed to pay for the launch.
Instead of consolidation, the rule seems to be one of teaming arrangements between current or prospective competitors. The deals range from simple co-marketing arrangements in specific geographic areas to sharing satellites and, in some cases, one operator’s purchase of an equity stake in another.
Examples include deals signed between the national operators of India and Malaysia on the one hand, and Russia and China on the other.
The Indian Space Research Organisation’s commercial arm, Antrix Corp., and Malaysia’s Measat Global Bhd have agreed to form a joint-venture company to market the Insat and Measat telecommunications satellites.
The agreement followed an earlier deal in which Antrix provided satellite capacity to Measat. The joint venture will offer Insat and Measat C- and Ku-band capacity from the orbital positions of 93.5 east longitude, where India has co-located Insat spacecraft; and 91 degrees east longitude, where Measat operates its Measat-1 satellite and, starting sometime in 2006, Measat-3 .
According to Measat filings with the Malaysia stock exchange, the company has tentatively agreed to purchase its Measat-4 satellite from Antrix, with a scheduled launch in 2007.
The Antrix-Measat combination likely will compete with a linkup between the Russian Satellite Communications Co. (RSCC) and the China Satellite Communications Co. (China Satcom).
Details are sketchy about how far this agreement will reach. China Satcom was created in December 2001 and includes China Telecommunications Broadcast Corp. and China Space Mobile Satellite Telecommunications Co. Ltd. Moscow-based RSCC is nearing the end of a fleet-modernization program that is already bearing fruit: The company nearly doubled its revenues, in U.S. dollar terms, in 2004 compared to the previous year.
RSCC also has an agreement with a big neighbor to the west, Eutelsat S.A. of Paris, which has agreed to lease capacity on RSCC satellites to extend its coverage eastward to Central Asia. RSCC in turn has leased capacity on Eutelsat’s W4 satellite for direct-to-home television broadcasting in western Russia.
The Russia-based Intersputnik organization, meanwhile, signed a deal with Eutelsat under which Intersputnik will sell capacity in its 25 member nations to the Paris-based operator.
Adding to the internationalization of the Euro-Asian market , SES Global of Luxembourg recently agreed to use capacity on the two Yamal telecommunications satellites operated by Gascom of Moscow.
SES Global, which since 2001 has suggested that it will need to consolidate its position in Latin America — it owns minority stakes in Star One of Brazil and Nahuelsat of Argentina — has thus far moved in the opposite direction. The company is attempting to start a Mexico-based satellite operator, called QuetzSat, with partner EchoStar Communications Corp. of Littleton, Colo., for television broadcasts in Mexico and in North America.