Consolidation among the numerous satellite operators in the Asia-Pacific region is arriving slowly and in many forms, with some companies abandoning the business and others striking partnerships with stronger players, Asian satellite operators said.
Some 18 satellite operators compete in the region, ranging from global giants Intelsat and SES Global to smaller, struggling companies including Mabuhay Philippines Satellite Corp. and Indosat of Indonesia.
In between are several stronger regional players including APT Satellite Holdings Ltd. and Asia Satellite Telecommunications Co. (AsiaSat), both of Hong Kong, and Measat of Malaysia.
Both Mabuhay and Indosat have indicated they might abandon the business of owning satellites and become customers of other satellite operators.
“We see some operators that are doing great, and some that are not doing so great,” said Eui Koh, president of the Asia-Pacific Satellite Communications Council of Singapore and Seoul. “Some are seeing revenue growth, and some are really struggling, but surviving.”
AsiaSat is minority-owned by SES Global of Luxembourg, the world’s largest fleet operator. APT, which recently was considered a takeover target by AsiaSat or another regional system, in December concluded a strategic partnership with Intelsat of Washington and Bermuda.
Under their agreement, Intelsat and APT will jointly market their satellites, extending each company’s reach.
“There were attempts to consolidate [between APT and AsiaSat],” Tom Navasero, vice president of Intelsat Asia-Pacific, said Feb. 7 here at the Satellite 2006 conference organized by Access Intelligence. “We demolished that by putting a wedge in to stop the Hong Kong consolidation. We hope to take that struggling company and put some money back into the pockets of the shareholders by helping it operate more efficiently.”
Rick Mortellaro, vice president of Loral Skynet of Bedminster, N.J., said prices in Asia generally are not increasing, a situation that will not improve with the expected launch of several new satellites over the region in the next two years.
Measat Satellite Systems of Kuala Lumpur is one of the companies adding capacity, with two satellites on order to accommodate the continuing growth of Malaysia’s Astro satellite-television service.
“The oversupply in the Asia-Pacific is beginning to even out, but the region remains one of diverse regulations,” said Paul Brown-Kenyon, Measat chief operating officer. “Astro has 2 million subscribers out of 4.5 million households. Our Ku-band capacity for DTH [direct-to-home satellite television] is sold out and Astro is demanding that we double the number of transponders we have available. The future is consolidation but I think it will take a lot longer than people expect. This industry requires scale, and there is a desire to remove some of the smaller players.”
Measat recently formed a strategic partnership with the Indian Space Research Organization (ISRO), which owns India’s Insat telecommunications satellites. India’s strict regulations on the telecommunications industry and foreign ownership maintain Insat’s near monopoly on satellite television in that country.
Brown-Kenyon said the partnership remains in effect despite Measat’s recent purchase of a satellite from Orbital Sciences Corp. of Dulles, Va., instead of the Indian-built satellite it expected to be purchased.
“One element of our partnership with ISRO was a satellite,” Brown-Kenyon said. “We were forced to place Measat-1 quickly and we purchased Measat 1R [from Orbital Sciences]. But we have plans in the future to purchase a satellite from ISRO.”
Navasero said satellite operators in the Philippines and Indonesia are not likely to replace their current satellites because the profit in pure satellite operations is nothing compared to the money to be made on the ground selling satellite services. “These companies will not any longer own their own satellites, but will focus on the ground,” Navasero said. “There is $1 upstairs and $100 downstairs.”