Karim Sabbagh

Yahsat and AI geospatial solutions provider Bayanat announced a large piece of consolidation at the end of the year with plans to combine into a brand new AI-powered space technology powerhouse in the Middle East and beyond. The combined operation, called Space42, will have an implied market capitalization of over 15 billion UAE dirhams (over $4 billion).

The company’s new managing director is a familiar name in the satellite industry, former SES CEO Karim Michel Sabbagh. The merger represents a remarkable turn of events for Yahsat, one of the standout satellite players in the MENA region over the last two decades. In this interview, Via Satellite talks to Sabbagh about his plans for Space42 once the merger is completed in the second half of this year.

VIA SATELLITE: This is truly a stunning piece of consolidation. Can you talk to us about the background of this deal? When did Yahsat and Bayanat start exploring the merger? 

Sabbagh: The decision to bring together two of the UAE’s leading spacetech businesses was driven by a shared strategic vision to create an AI-powered space technology champion in the MENA region with global reach. The meeting of the minds came about rapidly.

By joining forces and combining Yahsat and Bayanat’s complementary capabilities, we aim to create a vertically integrated powerhouse in the spacetech sector that will bring significant value to all stakeholders across upstream, midstream, and downstream solutions. The combined entity will be well positioned to unlock opportunities at the intersection of geospatial intelligence, satellite communications, and artificial intelligence.

From our perspective, this transaction is a game-changing consolidation, as it will harness the power of spacetech and AI to expand into new domains and unlock vast business opportunities and international growth. It is also a strategic milestone in the evolution of the UAE’s spacetech sector.

VIA SATELLITE: I don’t think we have seen such a combination in the satellite industry before. We have seen operators and operators, but not this combination of Space and AI. Why do you think this was a good path to take?

Sabbagh: Our approach goes beyond the common considerations of commercial and/or financial factors. The combined entity, Space42, is our strategic response to rapidly evolving dynamics in spacetech in terms of the growing universe of new use cases, transformative technologies, and new business models. We aim to establish a leading group with activities spanning AI-powered geospatial and mobility solutions, satellite communications, Internet of Things, Earth Observation (EO), business intelligence, and manufacturing capabilities.

So, we are taking a transformative step that, once completed, will cover the entire spacetech value chain in a differentiated manner. We are harnessing the power of AI right from the start to create a highly efficient operation and at the same time provide wide-ranging and comprehensive solutions across the geoint and satcom domains. Our goal is to empower and enable growth in the economies and societies we serve.

VIA SATELLITE: What will this merger give you the opportunity to do?

Sabbagh: The merger is a strategic decision that will enable Space42 to target a wider range of sectors and customers through an expanded geographic footprint and enhanced value proposition. By combining our geoint and satcom capabilities with AI, we are enabling the development of innovative platforms, products, and applications. This includes joint R&D, new use cases, and commercial and operational synergies. Through this approach, we will create considerable economies of scale, delivering significant benefits to the societies and economies we serve.

VIA SATELLITE: Do you believe regional operators can continue to exist successfully and grow their businesses, even those with strong national interests, without being involved in some kind of consolidation?

Sabbagh: The raison d’être of Space42 transcends the traditional dichotomy in the space sector that separates old and new space, regional and global businesses, and upstream, midstream, and downstream models.

Space42 aims to address four imperatives in geoint and satcom: Participating in the rapid developments of the spacetech sector, ranging from upstream to downstream; capitalizing on the rapidly decreasing development and manufacturing costs; harnessing the power of AI to enable new platforms and applications; and addressing the need to scale sovereign space capabilities for the UAE while expanding global reach.

VIA SATELLITE: Will this impact your investment in new satellites going forward? How does it change the dynamics of your capital expenditure plans?

Sabbagh: The merger will create synergies that will contribute to expanding our operations in the spacetech sector by leveraging our combined resources and capabilities more effectively. With a larger pool of resources and expertise to draw from, we can make informed and strategic decisions about our long-term investments in upstream, midstream, and downstream domains.

The two companies have already demonstrated their partnership potential with the establishment of a joint space program in 2023 that is advancing space capabilities through Bayanat’s geospatial intelligence and Yahsat’ space infrastructure. Our investments in spacetech will continue to grow.

Yahsat’s core business of operating communication satellites and providing associated services will continue unaffected, including the launch of Thuraya 4 later this year and the procurement underway of AY4 and AY5 – representing significant CapEx programs in their own right. The merger will add to Yahsat’s upcoming investments, combining Bayanat’s growing capabilities in EO through both LEO satellite constellations as well as other data acquisitions assets including HAPS.

VIA SATELLITE: How does the Thuraya product line fit into this combination?

Sabbagh: Thuraya is a valuable asset for Space42, as it serves a key market segment — mobile satellite services (MSS). With the continuous expansion of use cases for direct-to-device and other terminals, including bespoke or commercial grade options, Space42 will be well positioned to capitalize on these opportunities by building on Thuraya’s existing capabilities and its organic evolution.

The potential is further amplified by the growing synergy with geospatial intelligence. A key example is the development of applications for smart transport and intelligent traffic management, which combine information through IoT, geospatial data and AI to improve related public services.

VIA SATELLITE: Is the combined company going to be more of an AI company than a space company going forward?

Sabbagh: The establishment of Space42 has been driven by the ambition to create an AI-powered space technology champion with global reach. The merger allows us to leverage the strengths and complementary capabilities from both entities, creating a unique, vertically integrated provider of AI-powered geospatial and mobility solutions, Earth Observation, satellite communications, IoT and business intelligence.

VIA SATELLITE: What impact overall do you think AI will have on the space industry?

Sabbagh: AI will be essential to enhance various aspects of Space42, including design, operations, servicing, learning, and innovation. From a design perspective, AI will enable the creation of digital twins for smart cities where geospatial intelligence will fuse with sensory data from terrestrial and space communication networks to improve public services and enhance the experience for residents and visitors. In terms of operations, AI can help gather multi-year operating data to optimize satellite operations and improve the service quality while enhancing the management of space assets.

Additionally, our MSS business will significantly improve customer services by using AI-driven tools. These tools help extract and analyze data to better understand usage patterns across different market segments and geographies.

VIA SATELLITE: Is this a new chapter for Yahsat and Bayanat?

Sabbagh: The companies have been doing well and have grown strongly since establishment. Yes, this merger indeed marks a new chapter for both companies. They have been growing since inception and this merger introduces a reinforced trajectory for future development by combining spacetech and AI.

By creating an AI-powered space technology champion, we are setting a new standard for the industry and establishing a platform for transformative technologies to enable geoint and satcom services with significant impact on societies and economies. We are excited about the potential of this strategic step to strengthen our position regionally and globally.

VIA SATELLITE: Finally, what are your hopes and ambitions for the combined company over the rest of the decade? Where do you hope to position the company?

Sabbagh: Space42 is well-positioned to capture significant regional and international opportunities in geospatial and mobility solutions, earth observation, satellite communications, IoT and business intelligence. So, we are excited about the growth potential this will unlock for the combined business.

Separately, by creating a UAE-based global champion in the space technology industry, the combined entity will bring significant benefits and value to the UAE, supporting its economic vision to grow and diversify its economy as well as positioning the nation at the forefront of advanced technology globally. The space economy sector in the UAE has rapidly flourished cementing its reputation in the sector across the MENA region and globally, and we are committed to building upon the success of both entities.