Telenor Satellite CEO Morten Tengs.
Photo: Telenor

Satellite operators of all sizes will face key investment decisions coming up, particularly those with a history in ordering Geostationary Orbit (GEO) satellites. One of the most interesting operators is Telenor Satellite, which has a strong telecoms owner, which is unusual for this sector. The operator’s most recent satellite launch was Thor 7, and the operator has mainly targeted the broadcast and maritime markets. In an exclusive new interview, we talk to Telenor Satellite CEO Morten Tengs about the capacity take-up of Thor 7, as well as the operator’s plans to launch more satellites. 

VIA SATELLITE: Could you tell us about your potential capital investment plans and how you might mix ordering satellites in GEO compared to other orbits? Would Telenor consider non-GEO satellite investments? How much capacity have you sold on Thor 7?

Tengs: I am quite pleased with the uptake on Thor 7. After initial challenges related to getting our managed service platform into operation and overcoming some early scepticism against Ka-band, we are now seeing a very good take-up as the market is experiencing the merit of our Anker maritime connectivity services. Telenor is well underway toward tripling our share of Very Small Aperture Terminal (VSAT) enabled vessels within our addressable market since the introduction of Thor 7. We also have good traction with the wholesale capacity market resulting in overall satisfactory fill-rate on the satellite. Based on our success with the Anker maritime connectivity services, we are creating the basis for further expansion, although I don’t want to discuss capital investment plans at this stage. What I can say is that our focus is firmly on GEO, where we have excellent services and distribution.

VIA SATELLITE: In terms of the growth of the business, is maritime really the future for Telenor? How is the broadcast business holding up?

Tengs: Telenor has entered several multi-transponder capacity deals in the recent years and I see a sustainable marketplace for broadcasting. Of course, there is pressure on the entire video value chain due to ongoing innovations and changing viewing habits, and we don’t expect to be shielded from this. We work continuously to improve our efficiency and develop our products to meet the needs of the future.

When it comes to maritime, and mobility in general, we view this as a highly interesting growth market. We are capturing market share in our region as we speak and we aim to develop our position further thanks to good products, excellent customer care and attractive pricing.

VIA SATELLITE: The term “new era” has been mentioned a lot in recent times. But, can we actually say that a new era for satellite communications has now begun. What does this mean for Telenor?

Tengs: There is a lot of innovation going on, but there is also a lot of hype that isn’t necessarily rooted in profitable business plans. I think we can talk of a new era if the global constellations ever become profitable, self-sustained businesses. Meanwhile, we work relentlessly to improve the attractiveness of our products, improving distribution and delivering our renowned quality with ever increased efficiency.

On the token of innovation, we applaud the efforts made by satellite manufacturers to move their products towards standardized, software-defined satellites. For this to become realistic and bear full fruit in terms of real efficiency gains, operators have to start ordering satellites. We are thankful a couple of top-tier operators have kicked off this development. Telenor aims to stay vital in the industry and expects to present plans in the future where these new products could be relevant solutions for us. Beyond just satellites, I personally think that standardization should be a key objective across the space industry and a common goal for all to increase competitiveness against other, alternative means of communications.

VIA SATELLITE: Traditionally, broadcasting revenues have been the lifeblood of the satellite industry. Will that change? How do you see the mix of broadcast and other verticals significant change over the next few years? Will it change for Telenor?

Tengs: I am confident that broadcasting will remain a healthy market. The pie left for satellite in competition with Over-the-Top (OTT) and other delivery mechanisms will of course shrink and we will see consolidation, but the players that prevail in the consolidation game will be able to stay in the game. Needless to say, we fight every day to be among the players that prevail by focusing on improving efficiency while we become a truly customer-oriented service organization — as opposed to the old days with a lot of technology focus. In the long run, we aim to have broadcasting and data divisions as two diverse and similarly sized legs.

VIA SATELLITE: For all of the new satellites going up, the satellite industry is going to have to go beyond broadcasting and even to things like connected transportation, oil and gas, and government. What new verticals can you imagine the industry playing in over the next few years?

Tengs: Mobility has been very important for us and we are well positioned. We think the importance of mobility will increase, not only for maritime, but also aero, and possibly connected cars. Furthermore, we follow the development on 5G and see this both as a threat and an opportunity. The vision is a positive one, namely to integrate satellite into the fabric of the future 5G ecosystem, but translating from vision to specific business cases and working systems is a very hard challenge [that] the satellite industry is taking very seriously.

VIA SATELLITE: How are you looking to position Telenor going forward? Even though there may not be a short-term need for capacity, do you think the company may shift its strategy given what we are seeing in the industry as a whole?

Tengs: I am pushing Telenor to improve and become a better version of itself. Better in the sense that we serve customers even better, and that we do it with fewer resources and more automation. Although very simple, this has to be the basis for any sensible strategy and it is actually quite hard to implement. As I said earlier, we see good demand for our Anker services as well as our wholesale capacity and think we are in a decent shape in a challenging industry. One key strategic challenge for us will be to bring the right amount of capacity to the marketplace at the right time with an industry-leading underlying cost base. This is not easy for a regional operator with limited scale, but it is what we are striving to do and we hope to release more details in due course.

VIA SATELLITE: We have seen SpaceX move forward with Starlink and Amazon potentially with Project Kuiper. Hugely ambitious plans backed by billionaire business owners. How much pressure do you see these systems putting on the traditional players in the industry such as Telenor (and other traditional GEO players)?

Tengs: There is no doubt that these initiatives put pressure on the industry. On one hand, there are analysts presenting documents suggesting that the constellation will cannibalize each other in the fight for a limited opportunity. We have a hard time seeing a conventional business case close for the constellations. Having said that, we also see that with a very long horizon and access to billions of dollars, it might be possible to re-invent and re-define satellite broadband. While the industry goes through some hardship, we think the process will be healthy in the sense that those who are able to improve their efficiency will come out stronger and better, while other players might succumb. While constellations work to solve a range of technical, financial, commercial, and regulatory challenges, their GEO competitors shred any excess fat, prepare for the battle to come, and most importantly — gain new customers and improve distribution.

VIA SATELLITE: Has the dramatic move to OTT surprised you in any way? Is the future still strong for pay-TV over satellite?

Tengs: Telenor being owned by a Mobile Network Operator (MNO) and a strong player in the video business is not taken by surprise when it comes to OTT. We deliver OTT services to the Nordic market today, and based on our strong competence in the area, we seek to complement our Direct-to-Home (DTH) offering with OTT elements where possible. Viewing habits are changing, but satellite broadcasting will remain a relevant delivery technology in many years to come. Fibering up entire countries is not realistic, either due to low subscriber density or due to low willingness to pay.