With demand for data services soaring, satellite operators are also seeing a sharp rise in demand for a range of services, from voice and v-sat to backhaul. CommsMEA discusses the latest trends in the sector with four key stakeholders.
Masood M.Sharif Mahmood, CEO, Yahsat
Hussein Oteifa, senior regional director, SES
Jean-Philippe Gillet, regional vice president for Europe and Middle East sales, Intelsat
Ali Al-Kuwari, CEO, Es’hailSat
CommsMEA: How has growth been in the past 12 months? What developments have there been at your company?
Mahmood: 2012 was an instrumental year for Yahsat, by the end of 2012 all of the services we promised we would deliver were delivered, real live services. We’re talking about Yahclick satellite broadband and internet delivered on the ground, and backhaul. We also rolled out YahService, our government and managed services business, with government clients over here.
The launch of our second satellite in April 2012 was a milestone. Having fully delivered the services that we originally promised by year end was something we were happy with, and it made us confident.
Oteifa: We are seeing good healthy growth. I see a shift from trunking, which was big business 10 years ago. I see the trend changing from trunking to vsat satellite communications, and more towards sticky applications. Basically we have seen the growth change by the type of application, if you go back in history we used to sell much IP trunking, point-to-point, and we found that customers became more skillful or discovered new applications that triggered more demand, ie corporate networks or banking networks, so I do see growth happening from those types of applications. We see projects like connecting banking together and schools – it is exciting.
Most of the revenue is coming to the company from the broadcasters, mainly in Europe, but 26% of the revenue is coming from emerging markets, Middle East, Africa Asia, Latin America.
Gillet: There are three segments to our business, media, network services and government. If you look at our revenue today, about 46% of the business is generated by network services, 33% is generated with media and the rest is with government services. The way we look at our business, it is balanced between the three different applications, and also balanced between the different regions. Today we have relationships with all the telecoms and media players. We operate a fleet of about 50 satellites and we generated about $2.6 billion of revenue in 2012.
In Africa, we have more than 20 satellites covering the region, it is a large market, an area where we have always been active and it is one of our core markets. We touch most of the telecom operators, as well as media business in Africa.
We have launched in the past 12 months five different satellites that are covering the region. Three of those five are touching the Middle East region.
CommsMEA: Which services or verticals are proving to be the strongest for you?
Oteifa: Mobile backhaul, so we work with the major incumbent telecom operators in the Middle East. We find that in countries like Saudi Arabia or Oman, even though they are heavily fibred there are still a lot of areas not served yet because of the wide geographic area of the region. The backhaul, I don’t see that it will fade away. But of course the operators still have licencing obligations to meet. Also, if networks are damaged, network operators often need satellite.
Maritime is also big for us. A lot of ships go through the gulf or even between North Africa and the Atlantic. Then there is oil and gas, for which we usually work through partners.
Other applications are popping up, like maritime, aeronautical. I hear a lot of people are hungry to offer this type of service to airlines. I see this as a good trend that will stimulate the demand for satellite technology.
Gillet: We have different verticals according to the type of product. If you take network services we provide services for vsat networks and we cover maritime applications, mobility communications to planes, super yachts and cruise ships. We provide services to a lot of mobile operators that want to expand into new areas where there is no fibre. They use satellite as a way to complement their network. Meanwhile, with vsat, typically a vsat network could be a bank network, school, oil and gas where you have a few sites that have a requirement to receive and send information.
CommsMEA: To what extend are smartphones and tablets driving demand for satellite services?
Oteifa: The growth of tablets and smartphones will stimulate a lot of demand for bandwidth and even with fibre you can get congested so theoretically if operators use satellite we think it can offload some of this congestion. Our satellite services are efficient and very easy to deploy, all you need is a hub and antennas and you’re up and running.
CommsMEA: Are you working with many telecom operators in the region?
Mahmood: Our model is different in that we have invested in the delivery value chain which has enabled us to work also with distributors, agents or sales partners who are smaller in terms of size than typical telecoms operators. However we do deal with telecom operators across the region. We work with Etisalat in Afghanistan and Nigeria, while in South Africa we have had discussions with Vodafone.
Some operators act as a reseller, and in other cases we may augment their areas that lack good coverage with our read-to-deploy infrastructure. If you look at telecom operators in Nigeria, where they need to invest $150,000-180,000 per tower for 3G, we can deploy terminals that cost $350-$750 each.
Oteifa: My target heading the Middle East is to work with the telecom operators. The operators offer full services such as triple play and they connect banks, schools and so on, so they are our customers. However, most of the executives or decision makers at operators still have a perception of satellite communications as being expensive. We are planning to have workshops and face-to-face meetings to bring the level of awareness among decision makers on what satellite technology can do. We have already done this with some of them and they were very impressed.
CommsMEA: Which countries are proving to be the strongest markets for Yahclick?
Mahmood: Believe it or not, South Africa and Nigeria, with demand coming from cities. Afghanistan has also been a good market. We were surprised initially, we thought the demand would be from outside the cities but what we have seen is that demand is coming from within cities either from congested networks or for people who are not happy with the service they are getting from fibre.
CommsMEA: Which sectors have been most successful for your company?
Mahmood: NGOs, government supported verticals like schools, education, SMEs, businesses that require an alternative means of communication have been good, and in South Africa, believe it or not, a lot of consumers. The terminals are easy to move and easy to install but when it comes to installation it depends on the position, but in terms of physical attributes there is the antenna, modem, cable, and you’re done. It uses KA band, so pointing needs to be very sensitive, installers need to know how to deal with it.
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CommsMEA: As a new satellite operator, which verticals or segments are you targeting?
Al-Kuwari: Qatar Satellite was established in 2010 to meet the objectives of Qatar’s government of securing the broadcast and the telecom sector and also to run as a commercial entity. Another factor was the Qatar 2030 Vision which builds on four pillars, one of which is the ICT.
In terms of the services related to telecom, Es’hail 1, the first satellite will provide services related to trunking, to broadband and we will provide some services related to data and v-sat. It will be quite a significant side of the business.
We believe that by launching Es’hail 1 we are bringing extra capacity to the market, to the region. Also we are willing to provide, as much as possible, quality to our stakeholders. In Qatar we have a selection of broadcasters, telecom operators, so those operators can benefit from our services in having broadband, trunking in all those areas where there is no connectivity or fibre. We are lucky in Qatar in that we have fibre everywhere but somewhere else in the region other operators can utilise our services and benefit from the service of Es’hail 1.
CommsMEA: What sectors are you targeting?
Al-Kuwari: Voice and data can be for telecom operators, for the reporters, they are using the SNGs, we have many of them in Qatar, especially for Al Jazeera, which is using our services, so we are targeting broadcasters and the telecom operators. I believe two industries will be benefiting, the media as well as the telecom.
CommsMEA: How about the price of the services? How do you compete with other players?
Mahmood: Overall when it comes to pricing we don’t compete with terrestrial on price. What we compete with is our ability to provide coverage, deploy quickly, and offer availability in places where you could get a fibre cut. When it comes to satellite broadband, KA multispot technology which is what we are using right now is a breakthrough technology that gives high throughput. It has enabled us to achieve up to 18Mbps at reasonable prices. In some areas because of the lack of deployment of terrestrial infrastructure we are actually competitive with terrestrial pricing, although this is not part of our expectation, this is only due to a deficit in the land network.
CommsMEA: Do you have any big investments or plans for 2013?
Oteifa: We are investing in a satellite called Astra 2E, it will be operational in October 2013 and we will have over 12 transponders around the Middle East. We will also have KA band out of Europe so that we can uplink KA band or downlink KU. We sat with customers and asked what they wanted. The average cost of one of our satellites is $325m. The new satellite will massively expand satellite capacity for SES in the region. In addition to the investment in infrastructure we are cross-investing in people and marketing and promoting and selling it, so we do have plans for that. The response we have seen when it comes to commercial satellite broadband and overall commercial segment is making us think long-term that we need to be a continuous player and that we need to invest in the growth.
We are serious about this region and expanding here, and getting the SES name more familiar.
Al-Kuwari: The first satellite we consider to be a learning curve for Qatar, for our engineers, for the industry itself. We are trying to build the industry within Qatar so the investment so far, we believe it is reasonable and is meeting the objectives we have for the first satellite. So far Qatar has invested around $300m for the first satellite including build, launch, insurance, and building the company. We don’t have ground control as yet because our first satellite will be operated by Eutelsat in Paris but we have a monitoring centre in Doha which monitors all the signals, quality of service and all the interface with the customers. Everything is on track for summer. The KPIs show the launch will be in August.