Arabsat, one of the main players on the satellite landscape in the Middle East and Africa, is looking into hosted payloads while also continuing rollouts of new capacity. Arabsat CEO Khalid Balkheyour outlines the operator’s plans for hosted payloads as well as the possibilities in residential broadband markets throughout the Middle East and Africa.

VIA SATELLITE: When will you announce any hosted payload deals?

Balkheyour: We think hosted payloads will be a viable way to grow in the next period for Arabsat. At the same time, we are not only looking for partnerships, but we are looking for new orbital locations and new co-operation opportunities neighboring to our region. We are looking for partnerships with government entities. Initially, we were hoping to sign a hosted payload deal at the end of last year. However, with government organizations, it takes more time than expected, so, hopefully, we will reach this type of deal in 2011.

VIA SATELLITE: Will your company pursue other hosted payload opportunities this year?

Balkheyour: If things go as we plan, we hope to announce another one next year. This would be the first for the Middle East. We haven’t seen a hosted payload program involving two different organizations in the Middle East, so we are looking for a deal where Arabsat would use some of the payload and another organization would use the rest. There is no stipulation in terms of the division of the payload right now.

VIA SATELLITE: What is the state of your capacity expansion plans?

Balkheyour: We launched two satellites in June last year — Arabsat 5A and BADR 5 — and both of those satellites are almost fully utilized. We are happy with those successful launches. This year, we are launching the Arabsat 5C satellite in the August/September timeframe. That satellite will be launched at the 20 degrees East orbital location. It will have a Ka-band payload covering the Arab Peninsula, Iraq, Levant and Afghanistan. It will be the first of its kind in the region to be commercially available. We are introducing this technology in the region, and there is a challenge in terms of getting licenses and partners to utilize that payload. It is going to be a busy year for us trying to sell that capacity in addition to a significant C-band payload that is covering the Middle East, Europe, Africa and West Asia regions.

VIA SATELLITE: Last year, you said that you hoped to sign a signature Ka-band satellite contract with a telecoms operator in late 2010. Are you close to this deal?

Balkheyour: We have seen that there are a number of entities interested in this payload, so we requested from the interested companies to submit their proposals based on their business plan and their proposed form of utilizing this capacity with or without Arabsat involvement or partnership with Arabsat to deliver services based on Ka-band. We have received all the offers, and are now evaluating the different partners, but we aim to close this later this month. We expect to announce a major partnership in the next month with a major telco/ISP here.

VIA SATELLITE: Are the dynamics favorable for residential satellite broadband in the Middle East?

Balkheyour: Yes, because the terrestrial infrastructures are not mature enough as they are in Europe and the rest of the world. Additionally, you have to consider licensing difficulties in the region and getting the approvals needed to offer these types of services in the region. It is not one country like the United States or Canada. It is not like the European Union. Here, each country has its own regulations. It may delay the introduction of these services in the region. I would expect satellite broadband could have an impact in the Gulf region. It could have an impact in somewhere like Libya if things calm down. You have countries like Algeria and Egypt where there could be a demand for these services.

VIA SATELLITE: Would you consider SpaceX as a launch vehicle option?

Balkheyour: We usually like to see technology in this area matured before we go with it. We are pretty cautious here. We are risk averse. If it is proven technology, we will, of course, consider it, but we will not be at the front-end until we see it arrive. We would not look to someone like SpaceX for a good two to three years, because we have few satellites and cannot afford to take the risk.

VIA SATELLITE: Did you see strong revenue and profit growth in 2010?

Balkheyour: We did see an improvement in our overall figures in 2010 but perhaps not as much as we had hoped at the start of the year. We had late launches of our satellites. One satellite was delayed four months and the other one was delayed one-and-a-half months. We did not get the numbers we would have liked, but we did get well above the average market growth, creating a solid base for bigger growth in 2011

VIA SATELLITE: What factors are affecting capacity demand in the Middle East?

Balkheyour: There are a number of satellites set to be launched in the region, however, this is a particularly interesting question right now because of the turmoil going on in the Arab world, which might have an effect on the business growth. It could be positive; it could be negative. We will have to wait and see. It depends on the new regimes in each country and how they liberalize and control their space segment reach. We are entering into an interesting period, so we will see if things calm down after this period. So far, there is no direct impact, but changes are going on. I hope it would have a positive impact. The new thinking is calling for more modernization, more information and free societies, so I think there will be more demand in terms of reaching out to the world.

VIA SATELLITE: How is the defense market looking for Arabsat?

Balkheyour: Some of our customers are military and defense organizations utilizing the standard bands either C or Ku, but I do expect a lot of growth in that area hopefully with the Ka-band payload operational in orbit, as they will be able to utilize bigger and easier capacity to access. This could lead to more appetite in that technology. Some of our hosted payloads could be also carrying other frequency bands that are of interest in such an important sector, but it may take two to three years before we see a big jump in demand.

VIA SATELLITE: Will you be targeting any new markets?

Balkheyour: We have promised to launch one satellite a year since 2008. We are doing that. We are covering the whole of Africa right now as well as most of Western Europe. The natural expansion for us is to go East, and we are targeting countries like Afghanistan, Pakistan, Kazakhstan and even Turkey. This is a natural expansion for us in terms of geography.

VIA SATELLITE: What is the potential of in-orbit satellite servicing?

Balkheyour: Arabsat actually had discussions with MDA. It sounds like a great technology achievement, but I don’t know if it will be practical for us to implement in the near future. All of our satellites are new. We only have one satellite, which is reaching its end of life this year. By the time this technology is realized in the frame of the coming three years, our satellite will be out of service.