[Satellite News 11-25-09] Eutelsat’s decision to team up with Asia Broadcast Satellite (ABS) to co-locate the Eurobird 4 satellite at 75 degrees East with ABS-1 and ABS-1A puts Eutelsat a step farther eEast on the global coverage map and creates new opportunities for the operator to compete, according to industry analysts and exectives.
    The Eutelsat-ABS redeployment project will inject an additional eight Ku-band transponders to 75 degrees East to address markets in the Middle East, central Asia and Russia. Renamed W75/ABS-1B, Eutelsat’s satellite will also provide possible redundancy to customers until the arrival of ABS-2, which is expected in 2012.
    Andrea Maleter, technical director of space and telecommunications at Futron, said that the partnership represents an established challenge to competitors from both operators because it establishes a stronger foothold for both Asia and its surrounding regions. “All major satellite operators are now looking for ways to find ways to use their strong cash flows to leverage regional or local opportunities to access expanded orbital positions, new markets or distressed assets,” Maleter told Satellite News.
    For Eutelsat, the partnership comes at a time of growth for the operator, which saw an increase in revenues at 253 million euros ($373.7 million), up from 226.7 million euros ($334.8 million) compared to the same period last year in its 2009 third quarter. Eutelsat reported growth across all of its business segments, and the operator said its HDTV channels have increased tenfold since mid-2006 and more than doubled since June 2008 and hopes to expand its success to the east.
    “This is a pretty easy move east for Eutelsat. This is a direction they have been moving for a number of years with a mix of new spacecraft beams and partnerships,” said Maleter.
    For ABS, the Eutelsat partnership is a stepping-stone in an aggressive effort to boost its fleet through acquisitions and satellite fleet. ABS CEO Tom Choi spoke with Satellite News about how the company’s mid-November acquisition Mabuhay Satellite Corp. was only the beginning of the growth plan for ABS. “We plan to buy at least one more satellite in orbit before 2012,” said Choi. “ABS-1 is full, and we don’t want to see a slowdown in terms of revenue growth or EBITDA growth during the period between now and the delivery of ABS-2.”
    However, ABS’ aggressive expansion comes at the price of taking on debt, which the company is prepared to do. “ABS has less than 1.5 times EBITDA of debt. This is before the Mabuhay acquisition, which means that our total debt load is quite low,” Choi said. “We have the ability to lever up the company significantly more than that. The debt we are taking on, which is quite significant, will be for ABS-2. Depending ultimately on how much we need for that program, and we are in negotiations right now with other customers, we may have room or not have room to take on additional leverage to fund additional transactions. Regardless we hope to have enough flexibility to fund transactions beyond Mabuhay,” he said.
    Choi’s plan has been met with approval from analysts. NSR’s Patrick French said he believes ABS is taking the right approach to build its fleet. “This move is necessary for ABS if it is going to build up in scale and become more than a single satellite player in the market.”
    Maleter agreed with French’s assessment. “From ABS’ perspective it is a nice way to expand its competitive position. ABS seems to be positioning itself strongly in competition with AsiaSat, which has been the dominant regional operator up to now,” she said.
    Despite AsiaSat walking back 2009 year-end expectations in August, competing with the operator will not be easy. AsiaSat commenced operations on the AsiaSat 5 satellite in September and has won capacity contracts with TDM for television broadcasting service across more than 50 countries in the Asia-Pacific region and, most recently, a deal with East Asian Games to supply satellite capacity on AsiaSat 3S for live television coverage of the Hong Kong 2009 East Asian Games.
    Even though AsiaSat remains cautious, it also is optimistic. The company reported a 13 percent increase of profits in the first half of 2009 compared to the same period in 2008.