Blaine Curcio. Photo: NSR

[Via Satellite 10-11-13] NSR is set to release the third edition of its Satellite Operator Financial Analysis (SOFA) report in which one of the main conclusions is that regional operators are performing strongly and gaining a bigger slice of the overall pie. The report will be released in the next two weeks, and covers the financial performance of 25 top FSS operators. “If you look at the overall percentage of revenues being captured by the ‘Big Four’ operators (Intelsat, SES, Eutelsat, Telesat), that percentage is declining compared to one or two years ago. The regional operators are increasing their marketshare. Overall revenues are up in general. Over the last year, revenues went up 2.5 percent,” Blaine Curcio, analyst and author of the report told Via Satellite.

While there may have been currency issues that have impacted the growth of the ‘Big Four’ over the last year, the trend of stronger regional operators is clearly emerging. “The revenues of the ‘Big Four’ operators’ have increased by less than 0.5 percent overall in U.S. dollar terms in the last year. Granted, part of that slow growth rate comes from two of the Big Four–SES and Eutelsat–reporting in Euros, which negatively affected their dollar-denominated revenues. That said, even when taking into account currency fluctuations, the ‘Big Four’ saw revenue increases of just under 3.5 percent. Comparatively, the non-‘Big Four’ operators have seen an increase in revenues of over six percent. You are seeing this increase in marketshare for regional operators. With most industries, you tend to see more consolidation. But, in the satellite industry, there has been a shift away from that,” adds Curcio.

Another key consideration when analysing the financial performance of key operators here is that the figures could have been even more skewed in the favor of regional operators, but for currency issues in Japan which impacted Sky Perfect JSAT, the world’s fifth biggest global FSS operator. “Sky Perfect JSAT saw a drop in revenues because of the Japanese Yen devaluing. If you took Sky Perfect JSAT out of the equation, you have an 8.6 percent revenue increase for the non ‘Big Four’ operators and Sky Perfect JSAT. Regional and national operators have significantly improved their marketshare,” says Curcio.

Curcio admits he is surprised at the level of the performance of regional operators, even when accounting for certain outside factors. “In satellite telecom it is a bit different because you have these national operators, who can sometimes count on a sizable percentage of their business coming from their government or state-owned-enterprises. They are other factors in play. It is not terribly surprising that these smaller operators are increasing marketshare, but the amount that they have outpaced the big four operators over the last year is somewhat of a surprise,” says Curcio.

According to NSR’s research, 66 percent of revenues from the FSS sector are still coming from the ‘Big Four’, but with a lot of growth coming from emerging regions such as Asia, Latin America and Africa, regional operators are sometimes in a better position to take advantage. When asked to highlight the star performer’s amongst regional operators, both in recent years, and the last 12 months, Curcio opted for AsiaSat and Thaicom. “If I could highlight one regional operator over the last five years, I would say AsiaSat. They have increased their revenues over 100 percent in Hong Kong Dollar terms between 2007 and 2012. They have doubled in revenues in this timeframe. AsiaSat has done well as they have no debt. But, I think they have also positioned themselves in terms of diversification. In recent years, so over the last year or two, I would say Thaicom has had very impressive revenue growth. This has largely come from Ipstar,” he comments.