[Satellite News 07-23-10] William Wade will become the new CEO of
AsiaSat in the next two weeks. He is replacing Peter Jackson, a well-known figure in the satellite industry.
In an interview with
Satellite News Associate Editor Mark Holmes, conducted just before he takes the CEO role, Wade discussed the challenges ahead as he looks to build the AsiaSat business still further over the next few years.
Satellite News: How do you view the timing of becoming the CEO in terms of the landscape, as well as the opportunities and threats that face AsiaSat?
Wade: We are financially stable and well positioned in the broadcast market and from a company standpoint, it is a good time for me to take over. In the industry, there are a number of new opportunities. We have cash on our books and have a lot of flexibility on our balance sheet so we are actively looking at acquisitions in Asia. The market is strong and getting stronger. We didn’t see a lot of negative repercussions in terms of the financial crisis in 2008 and the industry in Asia generally weathered the storm quite well. Going forward, the landscape in Asia looks ready for new growth opportunities, so we have another satellite under construction – AsiaSat 7.
Satellite News: What are these new opportunities?
Wade: We are still focusing on our core business of transponder leasing, and continue to do the things we have successfully done in the past. But, I think there are ways for us to move into some new areas. We have a JV with EchoStar, which offers us a DTH platform initially in Taiwan. There are other similar opportunities in the region. I also think we are in a good position to take advantage of some acquisitions in the market place and participate in the industry consolidation in Asia. People have been talking about consolidation in Asia for a long time. The climate has not been conducive for it, mainly from a political standpoint, but, I think the region is looking more attractive now, so we are looking at potential targets.
Satellite News: Could you tell us about your capital expenditure plans in terms of new satellites? Will you have to accelerate your plans in view of the potential demand?
Wade: AsiaSat 7 is a smaller satellite. It was ordered as a replacement satellite for AsiaSat 5. It is designed to have some flexibility so if need be we can use it as a replacement for AsiaSat 3S, which is our flagship satellite. Ideally, we would like to build a much bigger satellite for this purpose. So with AsiaSat 7, we are looking at a number of options; we may utilize it elsewhere, and then build a much larger replacement for AsiaSat 3S with more beams and greater bandwidth. The 105.5 degrees orbital location is our hot slot where we presently have significant business, and that is where we see major growth opportunities.
Satellite News: So, when will you commission AsiaSat 6? How big will the satellite be?
Wade: We would look to procure AsiaSat 6 early next year, assuming AsiaSat 7 will be deployed elsewhere. We would commence construction next year, and then launch it approximately two years later. AsiaSat 6 may be a bigger satellite than AsiaSat 3S which has 44 transponders. We may add additional transponders in some of the Ku-band we are presently not utilizing. We may even add some Ka-band to explore the market potential for Ka-band in Asia. We only have AsiaSat 6 and AsiaSat 7 on the immediate horizon.
Satellite News: So, the satellite will have Ka-band on it, then?
Wade: AsiaSat 6 may have one Ka-band transponder on it. I don’t think there is going to be a big business for this particular transponder, but it allows us to test the market at limited cost. AsiaSat 6 would probably be the biggest satellite we have ever built.
Satellite News: In one of the last interviews we did with Peter Jackson, he said AsiaSat had been quite conservative in the past in terms of acquisitions. Might we see a different approach here?
Wade: I think in some ways you can say we were conservative, however we were conservative in as much as we were not willing to go beyond what was economically feasible to get the deal done. In some cases, the risks outweighed the benefits or from a political and economic standpoint, it did not make sense. We were conservative in the sense we were not going to overpay for assets and do deals just for the sake of doing a deal. I think the market is different now. If you look back a few years with the governments and national operators, you were confronted with a strong political element, which was the concept of satellites being national assets. So, when contemplating any acquisition you had to give greater consideration to the political barriers. Now, these operators are looking at their situation and seeing that their business plans may not have panned out so well, and now they have to replace satellites. They are questioning if they want to spend another $200 to $300 million for a new satellite. They now may have a different perspective and question whether they need to build a new satellite or should they partner with someone to help finance the replacement or help them better execute their plan, so, the overall climate has changed. Going back to the concept of conservatism, I wouldn’t say I am going to be significantly more aggressive, but I believe the circumstances will enable us to go out and execute deals that make sense.
Satellite News: In terms of national assets, are these more likely to be available in bigger or smaller countries in the region?
Wade: If you look at the larger countries such as China and India, their satellite programs are sustainable given their populations and domestic economic development. Some of the smaller operators are probably less sustainable, and some have run into problems which means they have to take a step back and reevaluate their situation. So there is an opportunity for them to sell these assets or create partnerships with other operators. The larger countries have the domestic requirement that helps to sustain their satellite programs.
Satellite News: Will it be easier to do deals with potentially smaller countries?
Wade: The climate is much more acceptable now either for full acquisitions or partnerships than it was a few years ago. Are there a lot of those opportunities? No, but there are definitely more than there were in the past. There are opportunities and new developments in DTH. Additionally our SpeedCast operation is active in many developing countries providing broadband, VSAT and other satellite services. Previously, we focused mainly on our core business, and that has historically been very strong and stable. But I think you will see us more pro-active in many of these applications and emerging territories.
Satellite News: Are we likely to see an acquisition in your first 12 months as CEO?
Wade: We will have to see. We would definitely like to make something happen and generate new business. I can’t guarantee it, but we are always looking.
Satellite News: What is your take on the satellite broadband opportunity in Asia?
Wade: When you consider satellite broadband, there is already significant business for connectivity. If you are looking at WildBlue type services, it is going to take a while for these to develop in Asia. I think there are opportunities, but I don’t think you will see them materialize in the next couple of years. You have to consider existing satellite capacity and the introduction of Ka-band to develop these broadband networks. In Asia, Ka-band is not presently widely used. People are now just trying to explore the opportunities in Ka-band. There are still Ku-band frequencies available in Asia. Broadband dedicated satellites in Asia have had issues in two areas. From a technical standpoint, the design of some of these broadband satellites lacked flexibility. Some have also struggled because of the economic environment. Many of their targeted markets did not have the disposable income to support such services. I think longer term there will definitely be a market for broadband services, but whether it will take the same form as the direct to home approach like WildBlue in the United States, I am not sure. It may be more connectivity based, serving ISPs or supporting or backing up existing infrastructure, rather than providing an independent service.
Satellite News: Are you excited more by DTH than satellite broadband in the region?
Wade: Looking at Asia versus the United States and Europe, we are behind in the evolution of DTH. DTH is still very much in its infancy here. India is in the middle of a significant development of DTH. They have issued a number of licenses, and there is considerable activity resulting in significant growth in India. But beyond India, the development is limited. There is an established DTH market in Malaysia and a new platform has been recently introduced in Vietnam via our new satellite AsiaSat 5. DTH in Indonesia has had a slow start but is now beginning to grow, but beyond that, it is still pretty limited. So, the real opportunity for us in the near future, as far as we see it, is definitely DTH. When you look at HDTV, this is certainly not going to be the sole driver for satellite utilization. But, what it is going to drive is the demand for television. It will enhance the consumer viewing experience that will eventually push DTH. Ultimately it will lead to higher bandwidth video services via satellite. In markets such as Taiwan or other areas which are highly cabled, many systems don’t have the bandwidth to deliver a large array of HDTV services, the solution is satellite. You also have China, where things are slowly moving in that direction, but there are still limitations to private satellite reception. However, I believe this will eventually happen.
Satellite News: Will you talk to EchoStar about doing more joint ventures similar to what you have in Taiwan?
Wade: That project is a little bit different, as we are actually the platform operator. We have moved out of our core business, but are letting EchoStar take on the day to day part of the operations. That is not necessarily something we would look to do widely across Asia. This is a unique opportunity for us that uses our BSS capacity on AsiaSat 4. Generally, we would be looking to provide capacity in our more traditional role, similar to what we have done in Vietnam. We see our role more in providing satellite capacity with unique beams that serve individual markets, rather than taking an ownership in the platform operator.
Satellite News: How does AsiaSat see the maritime market?
Wade: We, as AsiaSat, haven’t directly gone into maritime, but SpeedCast our subsidiary operates in that market. They are investing in that business, and it is a growth sector for them. They are doing very well and have partnerships with major shipping companies around the world. It is starting from a small base, but the growth rates have been very impressive over the last two years. We are supporting them in that business as maritime is an area where we see interesting opportunities.
Satellite News: At the CASBAA Forum, there was a sense that it was time to move on from what happened with ProtoStar. However, what would you say is the legacy of the ProtoStar situation?
Wade: Given the circumstances, it was a difficult situation to resolve requiring a lot of effort. I think what came out of this is that it demonstrated the ITU’s ability to administer the regulations, and it showed the industry they would make sure people followed the rules. I think it was a real achievement from an industry standpoint. It demonstrated someone can’t just muscle their way in. It wasn’t about keeping out a competitor, but rather about maintaining the ITU’s creditability. The legacy of ProtoStar was that it showed the system can work. What you found is that the administrations joined together under the banner of the ITU, and re-enforced the regulations, and that was a great victory for the industry.
Satellite News: Do you see the Asia market is in a stable position right now?
Wade: We basically compete with everyone in Asia and there are different competitors in each market. I am not so sure the Asian market has stabilized. I think over the next few years we may be looking at a situation that is less stable. The situation in Thailand is an interesting example. There are questions about concessions and how that business may or may not be supported by the government in the future. There are operators that need funding in order to protect their orbital slots or to replace satellites. As they don’t have adequate funding, some are looking for partnerships. We are seeing partnerships between satellite operators, where previously these situations did not exist. There are also operators looking to sell assets while other operators around the world are looking to expand to Asia. I think you will see more of these activities in Asia over the next few years. We have been waiting for it, and now it appears to be starting to happen.
Satellite News: So, could you acquire some satellite assets that might become available?
Wade: We are always looking and if it makes sense, we would do it.