WASHINGTON — When Yahsat decided to invest in its first satellite for Brazil, the the Dubai, UAE-based operator probably didn’t foresee the triple-whammy of a Zika virus outbreak, presidential impeachment, and double-digit unemployment that dogged the world’s 10th largest economy over the last two years.
Brazil had fallen into its second recession in five years by the time Yahsat finalized its order with U.S.-based Orbital ATK in September 2014 for Al Yah 3. The high-throughput satellite, slated to launch this year on a European Ariane 5 rocket, is expected to extend Yahsat’s commercial Ka-band coverage to an additional 600 million users across Brazil and Africa.
Yahsat Chief Executive Masood M. Sharif Mahmood told SpaceNews that Brazil’s woes haven’t made Yahsat’s first foray into South America’s telecom market easy. However, he said Yahsat is starting to see “green shoots of recovery,” with 20 to 25 percent of Al Yah 3’s capacity already spoken for by Italy’s Telespazio, the U.K’s Talia and others.
Yahsat, which on Jan. 17 celebrated the 10th anniversary of its founding by the Abu Dhabi-owned Mubadala Development Co., will soon have three satellites on orbit assuming Al Yah 3’s launch goes well.
The satellite’s 60 high-throughput spot beams will cover 95 percent of Brazil’s population and expand Yahsat’s coverage of Africa — the company’s largest market — to 60 percent of the continent’s population.
Part of Al Yah 3’s capacity — about 10 gigabits per second of throughput — will support Konnect Africa, Paris-based Eutelsat’s revamped strategy for delivering commercial broadband service to 20 sub-Saharan nations by 2019. Eutelsat said in November that its multi-year Al Yah 3 lease will replace the capacity lost with the Sept. 1 destruction of Spacecom’s Amos-6, the Israeli commercial satellite destroyed when SpaceX’s Falcon 9 rocket exploded while being fueled for a pre-launch test.
Mahmood said Yahsat was in the right place at the right time to pick up Eutelsat’s business. “But it didn’t come from that incident alone,” he said, referring to the accident. “We have always maintained our position and belief in Ka and our belief in Africa … We made sure we were there on the ground, we made sure we had the future capacity, we made sure we had the right designs from a space segment and ground segment — all of that came into play.”
Yahsat turned heads shortly after its January 2007 founding when it signed a $1.66 billion contract that summer with Astrium (now Airbus Defence and Space) and Thales Alenia Space to build its first satellites — a two-spacecraft telecommunications systems for military and civilian users.
Those satellites, Yahsat 1A and Yahsat 1B, launched in 2011 and 2012 respectively, and established the operator as a formidable regional player in Europe, the Middle East and Africa.
Al Yah 3 now promises to strengthen Yahsat’s position in Africa while extending the operator’s reach to South America.
In an interview with SpaceNews, Mahmood discussed Yahsat’s ongoing expansion and plans for generating business in its new and established markets.
How far along is Yahsat in the preparation for Al Yah 3? How much capacity is pre-sold?
Today we are very far along the road. We are looking at a Q1 or Q2 launch for the satellite in 2017. Today we are in a position where we pre-sold a good part of the satellite and the rest we are strategically making sure we allocate for our growth for the subscriber business. The numbers reached around 20 to 25 percent of the satellite sold. This is definitely a boost of confidence in terms of our business plan and our geographic expansion because these came from both Brazil and Africa.
Brazil has been good to us. We have the Yahsat office in Rio de Janeiro, we have the team populated, we have our partnership agreement not only for wholesale, we have wholesale plus our distributors as well and we are developing the system as we speak.
Regional publications have quoted you discussing the addition of four more satellites to the Yahsat fleet. What do your expansion plans look like today?
I think the conversation you are referring to was taken out of context. The question asked at the time was “what would be your ideal scenario for the company five to 10 years down the road?” This was not the ambition.
If the question is around general ambition then yes we continually strive to grow the company, especially on the commercial side to maintain the anchor customers we have and anchor relationships we have with the United Arab Emirate armed forces and the government agencies as being the satcom solutions provider.
On the commercial side we would like to grow that business, enrich our presence in our existing markets as well as get into other segments. As you know we have an MOU [Memorandum of Understanding] with Panasonic to explore working together on a constellation for aero [connectivity] and an MOU with Etihad Airways to do a test flight on one of their planes. We are pushing actively along those lines.
So is Yahsat not planning four additional satellites between now and 2020?
We are always planning additional satellites, but … in terms of a specific number of missions, that is something that is left to the market to determine once we see how things are picking up.
How did Yahsat’s recent deal with Eutelsat come about?
As you know it came at the backdrop of an unfortunate incident. We are never happy when we see a launch failure, especially since it impacts the manifest of the industry and impacts our colleagues and other operators. But it didn’t come from that incident alone. We have always maintained our position and belief in Ka and our belief in Africa. I think a lot of other operators made the move later on, but we made the move early on. We made sure we were there on the ground, we made sure we had the future capacity, we made sure we had the right designs from a space segment and ground segment — all of that came into play.
We saw a way for us to have a win-win relationship whereby we contribute to them and help them get back on track while they derisk some of our business in Africa.
Does that deal continue after Eutelsat launches their Africa Broadband Satellite in 2019?
The way we see it is the market is big enough for both of us, and the market specifically in Africa, while it is a niche market, the market is enough for both operators to be active in and build the capacity through their satellites or through our satellites, so I think it will have to be played by ear, but today what we see is the market is big enough for all of the capacity that’s coming.
Are there still discussions ongoing with Facebook about using Eutelsat now potentially through Yahsat?
I cannot comment on Eutelsat … but with respect to Yahsat we always keep an open mind to all of the discussions with all the interested parties in Africa. There will be Facebook, other operators — it’s very collaborative. We had discussions with Facebook a few years back and continue to have discussions with them, and we are open to any transaction or collaboration that the likes of Facebook would like to have.
Yahsat has gradually invested more and more heavily into Ka-band HTS. Is this where you see the future?
The jury is out on the desirability of Ka-band. What enables Yahsat to have a leading position is the fact that when we were moving towards Ka-band, not a lot of people were going to that spectrum band. As an experiment it worked for us, and that’s why we want to continue on this. We like to always be on the lookout for what’s coming out next so that we don’t become a one-trick pony.
What that means is we would like to repeat that success with what’s coming next. We are keeping a close eye on the mega-constellation developments, be it OneWeb or others, keeping a close interaction with them to make sure we could tap into any opportunity once this becomes viable.
When we talk about the future with regard to spectrum we are very engaged with satellite bodies such as the EMEA Satellite Operator’s Association (ESOA). Yahsat is involved in the spectrum conversation with the International Telecommunication Union (ITU) and the telecom sector. That puts us in a position not only to lead the defense on future bands such as Q and V, but also to be aware of the priorities in those bands. We are keeping an eye on those bands and the satcom discussion.
Yahsat was providing service for U.S. forces to augment WGS. Is Yahsat’s government business still U.S. focused or is it focused on the UAE and other nations?
Primarily the [UAE and other nations]. We’ve had a landmark deal with providing secure satcom for the Kingdom of Bahrain DoD. We extended to them a fully managed solution where they have their own satcom infrastructure fully developed in the kingdom using our satellites.
We have also been able to gain traction and deliver some satcom solutions and backup cases for Gulf Cooperation Council (GCC) DoDs. Today we see a pickup in the region.
There is still a lot of talk about oversupply in many markets. Have you felt pricing pressure from too much capacity being available in the markets where Yahsat is active?
The fact that in some countries we are the only available option, and not only from the skies but the only available option on the ground, this has given us some resilience, but it is an inescapable fact that the emerging markets have been hit and that caused some pressure for us. Luckily we were in a position where we are able to protect against that by making sure that we are in parts of the market where we are protected.
Ten years from now, where do you envision Yahsat will be?
When Yahsat was incorporated we didn’t even have the iPhone … if you look at 10 years in this millennium, the jump in business models is almost equivalent to two or three decades if you measure it against the previous millennium. Things really do change and it’s difficult to know what to expect in the future. What I would like to see is the continued growth of our commercial business and the continued dependence of the government business on our solutions.