Profile: Focusing on the ‘Rest of the World’

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  Space News Business

Profile: Focusing on the ‘Rest of the World’

By PETER B. de SELDING
Space News Staff Writer
posted: 11 June 2007
04:11 pm ET







Robert Bednarek,

Chief Executive, SES New Skies





The business focus of




SES New Skies,




The Hague, Netherlands, is sometimes described by its corporate parent, SES of Luxembourg, as “ROW” – rest of the world – to distinguish it from SES’ bigger divisions covering North America and Europe.


For SES New Skies Chief Executive Robert Bednarek, the good news




is that “ROW” includes markets where satellite demand is growing fast. For 2006, some 48 percent of New Skies’ $258.5 million in revenue was from business done in India, the Middle East and Africa, which the company groups into a single category.

Latin America was next, at 17 percent.

The Jan. 30 failure at launch of the large NSS-8 satellite has reduced New Skies’ near-term growth prospects, but company officials insist that will only postpone its




growth. These customers, it forecasts, will not find replacement capacity over India, the Middle East and Central Asia, where NSS-8 was designed to operate.

But with higher-growth rates comes more competition. In addition to SES’ usual competitors – Intelsat, Eutelsat, Star One and others – national governments in Latin America, Africa and the Middle East have announced new satellites designed in part to take business from New Skies and other international operators. Seeking to find their place in the market, operators of new satellites have a tendency to offer cut-rate introductory prices.

Bednarek
discussed his company’s outlook with Space News staff writer Peter B. de Selding.









You just ordered a large C- and Ku-band satellite, called NSS-12, and made a mid-2009 delivery schedule a top priority in the competition. Is a mid-2009 date realistic?






It’s an aggressive schedule, but we were very careful and we used a different approach. We had interactive sessions with vendors and basically asked them what they had that was available off the shelf, and what the schedule risk was. It differs from the approach wherein a buyer sets a list of detailed specifications and then asks for bids. It was a way for us to reduce the technical, cost and schedule risks. The company we selected, Space Systems/Loral, was able to assure us on these points by helping us understand the work flow in their factory.





You ordered NSS-12 from Loral after canceling a contract with Boeing for an NSS-8 replacement because Boeing did not meet the schedule constraints. What is the status of that dispute?




I had better not comment on that.





The SES New Skies business, which includes some fast-growing market areas, is growing faster than the SES business as a whole. What are your expansion plans in terms of capacity?





We expect to




increase our available transponders in orbit by 30 percent within five years compared to today’s fleet of 416 transponder 36-megahertz equivalents on seven satellites.







Your coverage areas include Latin America, the Middle East, South Asia and Africa – all places where start-up satellite operators, some government-backed, are launching new




satellites. Is this a threat to your business?




It remains to be seen how this will play out. The industry in general, and our company included, needs to give some push-back against any moves to re-regulate or create un-level playing fields with respect to market access. I am happy to compete with single-satellite operators on a level playing field. There has been some consolidation among the larger satellite operators, but there has also been the re-emergence of national operators. It’s a trend we have to watch.





So regional growth in some cases may not mean profitable growth?




It’s a challenge, and we think that our ability to offer connectivity in and out of regions, and to reassign capacity from one region to another if market conditions warrant, is a strength that single-satellite operators don’t have and that customers will appreciate.





Let’s go region by region in your coverage. First Latin America: Overall growth there is expected to be slow. Do you see opportunities?




There is indeed growth there. When you look at the overall figures they tend to blend all uses into a single result and it tends to hide some of the dynamics. One theme that is recurring in several regions for us is that it doesn’t cost much to start a DTH [direct-to-home satellite television] platform these days. Getting the programming and retail sales channels lined up is more difficult. In Latin America, our growth is centered on enterprise broadband, plus some regional or sub-regional DTH.




In India, regulators have made it difficult for foreign operators to compete with the Indian Space Research Organi





sation’s

domestically owned satellites. Is this changing?






Indian authorities have been very conscious of making sure they provide capacity for domestic demand as DTH platforms are licensed and demand exceeds the domestic capacity. They continue to work with foreign operators, including ourselves, to assure supply. I don’t see a situation where domestic satellite supply will be sufficient to meet all future demand.




And in Central Asia?

Kazakhstan has launched its own communications satellite.





For the moment we are completely out of capacity over the region, where there is a very strong growth in demand from corporate networks. The traffic there is enough for all of us competing. This area is an example where IP connectivity is viewed as absolutely indispensable to serve economic growth.





The U.S. government is one of your big customers for traffic to and from the Middle East. The demand forecast SES has given Wall Street suggests continued growth there. How confident can you be of it?




When people think of the U.S. government they may think of military customers only, but there’s a lot more to it than that. The cost-effectiveness of commercial satellites is well-established. With the new applications being developed, whether for data or imagery transmissions, it seems clear that demand for commercial network capacity will grow. It’s a very diverse bag of applications by governments – not just the U.S. government, but others as well.