AsiaSat no longer is part of the SES Global family, but while new owners are onboard, many of the company’s operational challenges will remain the same.

The operator announced that General Electric (GE) had become a main shareholder of AsiaSat, holding more than 34 percent of the company. CITIC Group remains the other main shareholder with a 34.8 percent stake. The transfer of shares between SES and GE took place March 29 after SES and GE announced it as part of a wide-ranging deal in February.

CITIC Group and GE, having equal voting interest in AsiaSat, now indirectly jointly own, through Bowenvale, 68.9 percent of the issued share capital of AsiaSat. The completion of the transaction is one of the conditions in the proposed privatization of AsiaSat announced by the company and AsiaCo Acquisition Ltd. AsiaCo Acquisition is indirectly jointly owned by GE and CITIC Group.

With overcapacity and pricing pressure in the region, Asia will remain a tough place to do business. Peter Jackson, AsiaSat’s CEO, said. "Though we see revived demands for satellite capacity for new applications, which should improve the satellite market as a whole, transponder pricing remains under pressure. Our big challenge is to maintain a profit-growth momentum amid keen market competition and pricing pressure."

Two Areas

The operator sees growth opportunities in two areas. "In the near term, we see opportunities for organic growth in two areas," Jackson said. "From increased demand from the more conventional applications such as television and video content distribution to cable head ends and to the DTH (direct-to-home) and [Internet protocol] type platforms and in addition for providing ‘multiple location’ data networks to companies and organizations as they increase their reliance on the computerization of their internal control and monitoring systems. In the longer term, we see additional growth as the television companies migrate from standard definition to high definition and from the delivery of video content to the mobile operators."

Asia is home to two of the biggest potential markets for satellite services, India and China. In terms of how he sees these markets developing, "China and India with the world’s two largest population and fastest growing economies are important users of satellite capacity over the next few years," Jackson said. "There are increased demands for enhanced and more diverse television services and improved communications for rural areas. For example, China is looking at providing DTH services driven by Beijing Olympics in 2008. India’s video market is also developing very rapidly with Government introducing more competition in the DTH and cable markets. IPTV services are also being introduced to these markets driving demand for more content and thus more distribution services."

Skywave

AsiaSat created a subsidiary, Skywave, to offer a low costs DTH services to Hong Kong, Macau, Taiwan and southern China. The subsidiary was loss-making in 2006.

"Skywave’s business remains static as we are operating in a highly restrictive and regulated environment," Jackson said. "We initially anticipated that the planned launch of China’s new DTH satellite and the subsequent relaxation of the regulations on satellite receiver ownership could also provide opportunities for the market to open up for competition. However ,the failed launch of this new DTH satellite has delayed the imminent relaxation of the DTH market in China. We now await the planned launch of a replacement satellite later this year and if it will change the market’s regulatory environment."

While China and India may represent strong growth opportunities for the operator going forward, the operator may also look at other areas to attack in the region. Satellite broadband is an interesting area in Asia, particularly as Shin Satellite’s IPStar initiative is widely regarded as one of the most innovative projects of its kind anywhere in the world.

Jackson admitted that the operator "did see a market need" for satellite broadband in Asia in rural and outlying areas where there are no terrestrial alternatives. "Such a service is only viable if it can make use of multiple frequency reuse and then achieve a relatively high utilization in each beam,"

Jackson said. "A critical factor would be the design of each beam’s footprint to ensure it covered the areas where demand was highest. In addition, in certain areas, it may need the Government to support the service financially to achieve the required beam penetration and thus make the service profitable. Our high power Ku-band can offer a broadband service and is currently being used by our customers for such a service in remote areas. However, most demand for broadband occurs in the cities and is most effectively served by an ADSL service against which no type of satellite service can compete on price."

Capital Expenditure Plans

"Our major capital expenditure over the next three years is the commissioning of AsiaSat 5, a new satellite for replacing AsiaSat 2 in 2009," Jackson said. "We are also looking at possible consolidation opportunities in the region. The construction of AsiaSat 5 is progressing as scheduled. This new satellite will give us improved power and coverage and increased capacity designed to meet future market needs."

–Mark Holmes