Arabsat CEO Expects Industry to be Resilient in 2009

The Arab Satellite Communications Organization (Arabsat) is embarking on an aggressive satellite rollout plan to bring new capacity to the region, unveiling in February contracts for the manufacturing and launching of two new satellites. Arabsat 5C and Badr 7 will be built by EADS Astrium and Thales Alenia Space, respectively, at a total cost of $590 million.
In an interview with the CABSAT e-Daily, Arabsat CEO Khalid Balkheyour talks about the challenges ahead for Arabsat and whether the global economic situation will have any impact on satellite operators in the Middle East.

CABSAT e-Daily: Do you think the Middle East will feel the same impact from the recession that we have seen in other economies around the world? How would this impact the satellite industry?

Balkheyour: The satellite industry overall has been resilient during economic downturns due to the long-term nature of contracts, revenue backlogs and relatively stable demand from core customers. While overall economic growth might slow down in the region, we still see positive growth rates as opposed to recession in Europe or in the United States. In our proactive monitoring of the developments in the global macroeconomic environment, we see satellite communications demand from broadcast and telecom clients to continue to grow, albeit at a slower pace

CABSAT e-Daily: Are you making more conservative forecasts as a result of worsening economic conditions?

Balkheyour: We are very positive entering 2009. Arabsat enjoys strong cash generation, and we expect this trend to continue with our planned launches. We have secured high-value, long-term contracts that will provide us with a healthy customer portfolio through 2009 and beyond. Capacity still remains very limited in the region, and we do not see this trend fading away in 2009.

CABSAT e-Daily: Do you still expect there to be a strong demand for satellite capacity in 2009?

Balkheyour: Specifically in MENA, we still see strong demand for satellite capacity throughout 2009. Continued expansion by our telecoms and broadcast clients will drive demand for the coming year and beyond. The MENA market will continue to be our focus, while at the same time, opportunities in relevant markets will be considered

CABSAT e-Daily: Will you continue to expand your satellite capacity?

Balkheyour: Arabsat’s growth plan includes the launch of four new satellites in the next four years. The manufacturing phase is well on track, and we have already secured the financing needed. Arabsat will have the youngest and most advanced satellite fleet that will best serve our clients in the region.

CABSAT e-Daily: Do you think the region can sustain multiple satellite operators or will there be a shakeout?

Balkheyour: While we see strong demand in the region, we also expect increasing competition, making scale a key competitive advantage. Therefore, we see the benefits of consolidation or partnerships between regional operators. Will the smaller players be able to generate the financing required to launch new satellites and upgrade their existing fleet? This remains to be seen. Arabsat is firmly established and open to exploring all growth options.

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