[Satellite News – 5-30-08] It has been a busy time for Al Yah Satellite Communications Company (Yahsat), the new Middle East satellite operator. It announced last week that it wanted to raise $1.2 billon from the finance markets to fund it satellite communications system. As well as looking to raise financing for the system, the company also announced in April that it had inked a deal with the UAE Armed Forces to provide secure satellite communications in the UAE. The UAE Armed Forces will lease satellite capacity on Yahsat satellites for a 15 year period as Yahsat’s first government customer.
    The company has one of the most ambitious business plans of any new satellite operator. The company, signed a major deal in August last year with leading European satellite companies EADS Astrium and Thales Alenia Space regarding the buildout of a dual satellite communications system, costing over $1.6 billion. The two satellites are scheduled to be launched in the second half of 2010.
Yahsat’s CEO, Jassem Al Zaabi, the man charged with making Yahsat a success, talks to Satellite News Associate Editor Mark Holmes about recent developments and how the operator’s business plan is shaping up in the Middle East

Satellite News: Could you tell us the significance of the recent deal with the UAE armed forces? In terms of the satellites for military use, are they now filled up?

Al Zaabi: There are two sides to this question. The impact on Yahsat is obviously great financially, and also strategically. A big chunk of the satellite is dedicated to government services and the UAE Military was engaged with us in this exercise a long time ago. They have now committed officially to a significant portion of the overall system capacity for a long period of time. From the Military perspective, just like any other military, they need a robust and good telecoms system, fixed or wireless. Satellites are always required, not only as a contingency, but also as a primary tool in government and military telecoms systems. We believe this will give them a strategic tool and also it will add to their telecoms flexibility.

Satellite News: Are you expecting to announce any other deals in 2008?

Al Zaabi: We might sign a deal in 2008, but it will be with a private sector service provider. We are going to be present at MECOM, that will happen in Abu Dhabi, as well as GITEX. We are also planning to approach the finance market in second quarter of 2008. These are few of the highlights this year.

Satellite News: A year on, and with a credit crunch impacting the U.S. and Europe, will this have any impact on satellite demand in the Middle East?

Al Zaabi: It will not. There is a strong demand for capacity in places like Africa and Middle East. Satellite capacity has become a very important need for corporate and government users. We don’t see any impact for us on the demand side. On the project finance side, we believe we have a strong business model to meet our financial plans. .

Satellite News: Are there any plans for a third Yahsat satellite yet?

Al Zaabi: As CEO, I would love to start to work on a third satellite. But, for our shareholders, it is very important to make sure the system is delivered or at least close to being delivered before talking about a second generation of satellites. So, as of today, we have had no discussions regarding a third satellite. But, we expect that to happen. We think that will be a natural move for us.

Satellite News: When we spoke last year about the prospects about doing deals with media players in the UAE, you said, “We want to come up with a strategy that is a win/win relationship with those media players. We are very much focused on partnerships. We will be communicating more to the market in the first quarter of next year in terms of how we are going to work with media partners.” Could you give us an update on that?

Al Zaabi: When it comes to media and broadcasting, we are working very closely with many government partners in Abu Dhabi who are involved in the broadcasting side of the business. Now, since this is a joint exercise, I can’t tell you too many of the details. This is going to be announced in the fourth quarter of the year. As I said to you last year, we are going to do something in this regard, and we have been.. What I can tell you, is that we will be part of the broadcasting business.

Satellite News: You also said you hoped to announced partnerships in early 2008 in terms of satellite broadband in the Middle East? Can you give us an update on this?

Al Zaabi: Let’s wait and watch for a few months on this. It is a very delicate market. We have been studying this very carefully, doing our homework and want to make sure we send the right signals to the market. We want to ensure that our system is thoroughly equipped.

Satellite News: How much capacity have you sold on the first satellite? Is this in line with your own projections?

Al Zaabi: All the capacity dedicated for the government business is already sold out. On the commercial side, we announced during CABSAT in March a deal with Emerging Markets Communications (EMC), where we sold C-band capacity. The deal was worth AED 400 million ($108.92 million). That was a significant deal for us. They are already present in North America, Europe, Africa, and Asia. They are one of the major satellite service providers to international NGOs. We are very proud that EMC chose Yahsat as a platform for their satellite services.

Satellite News: You said you wanted to be known for being an end-to-end solution provider, rather than just a satellite capacity provider? Do you think you have been successful in achieving this?

Al Zaabi: I think so. In CABSAT we started showcasing and we presented ‘the Yahsat Advantage’. We are going to provide as many services as possible. We don’t just want to provide raw capacity, but also services. We believe ‘Yahsat Advantage’ starts not just from the services, but understanding the requirements within the region, and trying to provide these services. We are already building the competence within the company to be able to help service providers. If they need the full value chain, we can help them. This is one of the strengths we will have, in addition to our robust system. We are committed to working closely with our partners and customers and ultimately being an end-to-end solution provider. We want to provide one of the best services on the market.

Satellite News: As the CEO of the company, what are the major challenges for the company in 2008?

Al Zaabi: Just like any new start-up, we have to make sure we are up to speed operationally in terms of the system and human capital. We also want to build a strong competence within the company. The other area we are concentrating on is the distribution and sales network, which we are building prior to the launch of these satellites.