The Middle East’s two dominant satellite fleet operators, Arabsat and Nilesat, served notice on newcomer YahLive that they will use their established base of satellite-television dishes to make it difficult for a third player to find a foothold.
Riyadh, Saudi Arabia-based Arabsat is in the middle of a major fleet expansion that will add four new satellites to its current three-satellite fleet by 2012. Cairo, Egypt-based Nilesat is adding a third satellite of its own in 2010 and is also expanding in a partnership with Paris-based, which is making in-orbit Eutelsat satellites available to Nilesat.
These two companies are not alone in seeing the growth potential of the region. SmartSat of Dubai, United Arab Emirates, a startup operator, is planning a satellite and has said it has access to $500 million for the project, but has not yet announced a manufacturing contract.
YahSat of Dubai is launching two large satellites in 2010 and 2011 and earlier this year announced a joint venture withAstra of Luxembourg, called YahLive, to target the direct-to-home television market. YahLive will market 23 Ku-band transponders on the Yahsat 1A satellite, to be launched in 2010 into the 52.5 degrees east orbital slot.
The question for YahLive will be how to persuade prospective customers to switch their rooftop antennas from the Arabsat or Nilesat satellites, and how to persuade television broadcasters to use YahLive instead of the two established platforms. As has been shown in North America and Europe, breaking into a duopoly market is not easy.
“We are the Hot Bird of the Arabic countries,” Eutelsat Chief Executive Giuliano Berretta said of Eutelsat’s position in the Middle East with Nilesat. “The legacy of antennas pointed to one place in the sky is difficult to change. We don’t see any problems in the future.”
Nabil Shanti, vice president and chief commercial officer at Arabsat, said the 21-nation organization had secured a 20-percent share of the market in the Middle East and North Africa by 2007, and expects that share to increase with the new satellite capacity.
SES Chief Executive Romain Bausch acknowledged that “it is difficult for newcomers. But in North Africa and the Middle East, we believe the market is important enough to sustain a third position.”
Mohamed Youssif, chief executive of YahLive, reminded Berretta that dominant companies do not always stay dominant.
“Dishes in the Middle East used to be all pointed to Arabsat before Nilesat came in,” Youssif said. “If you offer different pricing structures and more value added, people will point their dishes to a new slot.”
Berretta responded: “I didn’t say it was Mission Impossible. But it is Mission Difficult.”