NSR re­veals its satel­lite op­er­a­tor fi­nan­cial anal­y­sis

Satel­lite Op­er­a­tor Fi­nan­cial Anal­y­sis

OffComm News - - CONTENTS - Blaine Cur­cio, se­nior an­a­lyst and re­port au­thor.

In last year’s Satel­lite Op­er­a­tor Fi­nan­cial Anal­y­sis, 3rd Edi­tion ( SOFA3) re­port, NSR made it a point to high­light the in­creas­ing mar­ket share of re­gional satel­lite op­er­a­tors as com­pared to the Big Four in re­cent years. It’s an in­ter­est­ing phe­nom­e­non given that most in­dus­tries are prone to con­sol­i­da­tion and a larger share of the pie go­ing to the larger play­ers due to, among other things, economies of scale and in­creased mar­ket pen­e­tra­tion.

How­ever, this year, in NSR’s Satel­lite Op­er­a­tor Fi­nan­cial Anal­y­sis ( SOFA), 4th Edi­tion, ( SOFA4) it is noted that the Big Four struck back in a big way, led by Eu­tel­sat’s ac­qui­si­tion of Sat­mex, which in 2012 rep­re­sented nearly US$ 150M in rev­enues and was a size­able re­gional op­er­a­tor. “In­clud­ing the Sat­mex ac­qui­si­tion, and solid growth from SES, the Big Four saw their com­bined rev­enues in­crease by nearly 5% in 2013, which is a huge in­crease from the roughly 1% in­crease that th­ese com­pa­nies saw in 2012,” said Blaine Cur­cio, se­nior an­a­lyst and re­port au­thor. “Fur­ther, non- Big Four op­er­a­tors saw their rev­enues de­cline by nearly 4%, although it should be noted that this would have been more or less flat had the Sat­mex ac­qui­si­tion not been taken into ac­count,” adds Cur­cio. Over­all, the re­port­ing op­er­a­tors cov­ered in this re­port saw their rev­enues in­crease by around US$ 210M, or 2%, com­pared to 2012, a num­ber that is well within the “GDP­like” growth rates that one in­dus­try in­sider pre­dicted for large satel­lite telcos mov­ing for­ward.

Niche mar­kets

De­spite the Big Four see­ing a sig­nif­i­cant in­crease in their mar­ket share, the re­port finds that a num­ber of re­gional op­er­a­tors con­tinue to power for­ward and carve out strong niche mar­kets in their ar­eas of strength. Arab­Sat, for in­stance, de­spite re­leas­ing very limited fi­nan­cial data, was re­ported to have in­creased its rev­enues by over 10% in 2013, pro­pel­ling it past Sing­Tel- Op­tus for the 6th largest FSS op­er­a­tor in the world by rev­enue, no small feat. Other no­table re­gional play­ers in­clude Thaicom, Chi­naSat, and APT Satel­lite, all of which have seen big growth num­bers in re­cent years. Beyond the split be­tween the Big Four and the rest, SOFA4 pro­vides com­men­tary on the way that new business mod­els, namely HTS sys­tems, are af­fect­ing the par­a­digm of the satel­lite telecom­mu­ni­ca­tions in­dus­try. “From an op­er­a­tor per­spec­tive, cer­tainly one of the op­er­a­tors get­ting the most at­ten­tion, be it en­cour­age­ment or spec­u­la­tion, is Avanti Com­mu­ni­ca­tions,” notes Cur­cio. As the re­port notes, the company has seen ex­cep­tional rev­enue growth, with rev­enues dou­bling in FY 2014 to nearly US$ 70M. How­ever, one con­cern out­lined through­out the study is the company’s flat back­log, which may in­di­cate equally flat de­mand for its all- HTS play mov­ing for­ward. With pos­i­tive EBITDA for the first time in 2013/ 14, Avanti now has rel­e­vant val­ues for a num­ber of EBITDA- re­lated met­rics, im­prov­ing the over­all qual­ity of as­sess­ment for this young company.

Bot­tom line

With in- depth anal­y­sis mar­ry­ing the fi­nan­cial side of the in­dus­try with the sup­ply and de­mand side of the in­dus­try, NSR’s SOFA4 sifts through the num­bers to high­light the real trends in the mar­ket. De­spite the Big Four strik­ing back in 2013, NSR re­mains con­fi­dent that bar­ring fu­ture M& A ac­tiv­ity, re­gional play­ers will con­tinue to see faster growth rates mov­ing for­ward, and will con­trib­ute to the com­pet­i­tive and very spe­cial na­ture of this in­dus­try.

Re­gional op­er­a­tors con­tinue to power for­ward and carve out strong niche mar­kets in their ar­eas of strength

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