NSR reveals its satellite operator financial analysis
Satellite Operator Financial Analysis
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.
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.
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