Satellites For Africa: As Bandwidth Grows, Business Slows

Intelsat

Communications satellite services provider Intelsat plans to launch two satellites on Aug. 24 in what the company describes as a significant moment for a largely underserved African market, IT Web Africa reported.

Intelsat 33e will join two other satellites to cover Africa and the Middle East.

Intelsat 36 will mostly serve pay TV provider MultiChoice, a Naspers-owned video entertainment and Internet company based in South Africa that does business across the continent.

“Just watch, price increase incoming for DSTV subscribers,” an IT Web Africa viewer said on the site’s comments section.

Launching two satellites simultaneously is unusual, but it makes commercial sense for the company and the timing is right, said Brian Jakins, Africa regional vice president of sales at Intelsat.

“They serve the same market predominantly,” Jakins said. “Africa has shown a lot of growth on the broadband side and there is also a lot of growth on the media side as well. I think (the dual launch) was related to a combination of timing and commercial attractiveness.”

Intelsat, which has offices in the U.S.- and Luxembourg, operates a fleet of 50 communications satellites in geostationary orbit. It has one of the world’s largest commercial fleets.

A satellite in geostationary orbit appears to remain in the same spot in the sky but it’s actually moving at the same speed as the Earth rotating below, according to Galactics. It’s usually very high up — 22,276 miles above the equator.

Earnings are down

For the second quarter of 2016, Intelsat reported earning $228.3 million (42 percent of its total revenue) from network services — a decrease of 16 percent compared to the same period in 2015. Media revenue was $211 million (39 percent of Intelsat’s total revenue) in the second quarter — a 5 percent decrease. Government revenue was $93.6 million — 17 percent of Intelsat’s total revenue.

Intelsat is struggling to service $15 billion in debt at a time of slow growth in its satellite telecommunications business, Space News reported on May 18. Just to maintain its current fleet requires a capital investment in about three satellites per year.

The entire fixed satellite services sector is under pressure from the economic slowdown in certain regions coupled with an increased supply of satellite bandwidth, according to Moody’s.

Intelsat, Paris-based Eutelsat and Luxembourg-based SES are the three biggest global commercial satellite fleet operators. Fresh concerns about the near-term prospects for the major satellite fleet operators were raised after Eutelsat issued a revenue and profit warning on May 12.

Their businesses are not interchangeable, according to Space News. Each has its own unique business focus. But they are similar enough that a problem in one will rattle the nerves of investors in the other two.

Jakins said there’s growing demand by its customers for higher capacity and efficiency. Trends show Africa’s growth prospects in communications, broadband and media.

“The market is robust and it is growing,” he said. “If you look at Africa’s Internet penetration, we have been trailing at around just under 15 percent. Our population as a region is often compared to Latin America and their Internet penetration is almost at 40 percent, so from an Internet penetration perspective you can see that there is a huge demand for broadband capacity.”

Intelsat has about 300 million broadband connections and the market is generally underserved, Jakins said.

“There is a large population across sub-Saharan Africa that are not connected to any form of technology and this is where satellite plays a big role by enabling us to connect those at the last mile — to connect those rural and underserved communities,” he said. “Satellite … is ideally placed to service all those markets.”

Partnerships with mobile network operators and others are managed by Intelsat staff from offices in South Africa and Senegal.

Intelsat customers include Coca-Cola, Multichoice, Vodacom and Gondwana International Networks subsidiary AfricaOnline.

Another launch is scheduled in February, and seven satellites are planned over the next four years. Intelsat is also working on low constellation satellites which will bring lower latency, higher speeds and greater capacity.

Source: AFK Insider