Thaicom Grapples with Slow IPStar Sales

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PARIS — Satellite fleet operator Thaicom of Thailand on May 19 said its large IPStar/Thaicom 4 Ku-band broadband satellite had a fill rate of just 15.9 percent as of March 31 and that a large contract with the Australian government will increase that rate to less than 20 percent.

In a presentation to investors, Thaicom officials said they expect the contract with Australia’s NBN Co., which is scheduled to last for at least five years and is valued at up to 100 million Australian dollars ($106 million), will increase IPStar/Thaicom 4’s utilization by around 1.2 gigabits per second of throughput.

The Ku-band satellite was launched in August 2005 and at the time was the highest-throughput commercial spacecraft in orbit. The NBN Co. contract will help restore the Australian revenue base for Thaicom, which has slipped the past year as IPStar broadband terminal sales have leveled off.

Thaicom will be providing bandwidth, not terminals, for the NBN work. It will be working with Gilat Satellite Networks of Israel, which will be providing the ground terminals under the contract. The five-year agreement is designed to provide interim Ku-band capacity while NBN concludes negotiations for the purchase of two Ka-band broadband satellites and related ground hardware.

One industry official said NBN, which had originally asked for turnkey bids including the satellite, the ground segment and system integration, is now asking for separate bids from satellite manufacturers and ground-segment providers.

At least three satellite builders — Space Systems/Loral of the United States, and Astrium Satellites and Thales Alenia Space, both of Europe — are bidding for the satellite contract, according to industry officials. For the ground infrastructure and user-terminal contract, the bidders are Gilat, Hughes Network Systems and ViaSat. Industry officials said NBN is expected to select the winners this fall.

For the three months ending March 31, Thaicom said IPStar equipment sales totaled just 92 million Thai baht, or about $3 million, down 57 percent from the same period a year ago. In several markets, the terminals have been sold as part of government broadband-stimulus programs that include government subsidies for consumers who purchase the hardware.

Sales of IPStar services, which Thaicom is counting on to drive revenue in the future, were up 40 percent, to 487 million baht, compared to a year ago. Compared to revenue for the three months ending Dec. 31, IPStar services revenue increased 8 percent. The company said markets where bandwidth use increased included Malaysia, Myanmar, Cambodia and Indonesia, as well as Australia.

The company is counting on markets to which it has only recently gained access to boost IPStar/Thaicom 4’s fill rate. India is perhaps the biggest near-term opportunity. As of March 31, some 7,000 IPStar terminals were deployed to Indian subscribers who in the aggregate were using slightly more than 1 gigabit per second of IPStar/Thaicom 4 throughput.

In Japan, Thaicom said it had contracted with a major telecommunications operator for more than 2 gigabits per second of capacity, mainly for cellular backhaul. Thaicom said the Japanese market features a relatively low number of terminals but high per-terminal bandwidth consumption.

The earthquake and tsunami in Japan in March has stimulated Japanese demand for IPStar services in areas where terrestrial communications have been knocked out.

In China, IPStar is being tested for so-called femtocells, meaning an IPStar terminal that serves as a cellular relay for mobile telephones within a radius of 1,000 meters where there are no line-of-sight obstructions.

Thaicom’s conventional satellite services revenue, which had been falling in recent months, rebounded this year to 562 million baht, a 4 percent increase from the previous quarter but still down by nearly 12 percent from where it was a year ago.

In a financial statement, Thaicom said the revenue decline is due in part to the Thai baht’s appreciation against the U.S. dollar. The increase since the beginning of this year is due to higher revenue from satellite transponder leases.

Thaicom said that as of March 31 its conventional satellite business, as distinguished from the IPStar/Thaicom 4 broadband division, had a backlog of $274 million. So far in 2011 the company has booked 18 new contracts for transponder capacity on the Thaicom 5 satellite.

As of March 31, Thaicom 5’s 25 C-band transponders were 93 percent full. Its 14 Ku-band transponders were 98 percent full. Three-quarters of the satellite’s customers are broadcasters, which have put a total of 374 television channels on Thaicom 5. The remaining customers are other telecommunications service providers.

As of March 31, Thaicom’s DTV satellite-television subsidiary surpassed 1 million viewers for the first time. The service, which beams 80 television and radio channels in Thailand, has increased its audience by 50 percent in the past year, Thaicom said.

 

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