The satellite industry has just completed its quarterly reporting season, and theres little doubt that the FSS sector is in great shape. Satellite operator SES, as of March 31st, was fully using 995 transponders out of a fleet total of 1249 (79.7 percent, and up 32 full transponders on the same period last year) with markets such as India filling every available transponder on its SES-7 craft. This is the reason why SES has ordered a new 33-transponder satellite (SES-8) to boost India coverage. India is proving to be a hot market for SES, where it has about 50 percent of the local DTH market. Its capacity is leased via Indias ISRO space organisation, usually on five-year contracts for DTH clients. Indias DTH demand is growing exponentially, up from 20 million at the end of 2009 to more than 32 million homes today.
SES president/CEO Romain Bausch said the German consumer is at last starting to embrace high-definition (HD) and pay-TV in general. News Corp-backed Sky Deutschlands improved HD offering will continue to drive the consumers interest in pay-TV, he suggested. Two or three new HD+ channels will also be added by year-end, he added. There is progress in the market. Astra at 19.2 degrees East currently could be left with around 20 unused transponders once Germany switches off its analog transmissions.
However, SES big news was an explanation of how its OneSES restructuring would work (see box). The operative words were streamlining and refocusing and how such will boost overall efficiency as well as seek new commercial opportunities, particularly in emerging markets. SES is recruiting extra staff on a regional basis, said Bausch, to achieve the companys aims. SES new management structure kicked in on May Day, May 1st, which saw a consolidation of its activities under a single operational system. This will help to deliver around 10 to 15m euros in cost savings per annum by 2012, building to a savings/increased revenues of 25 to 30m euros per annum by 2013.
This year will see six new satellites added to its fleet, with three of the craft adding incremental transponders. This includes Yahsat 1A, operating over the Middle East, Africa, Europe and parts of Asia, where SES Astra has a partnership to sell the DTH capacity on the craft. Yahsat 1A launched on April 22nd. The other six satellites will create a busy launch schedule, said Bausch.
SES is sticking with its formal guidance, which is to deliver three percent growth in recurring revenues this year, as part of the four to five percent CAGR anticipated in the 2010-2012 time-frame. SES Astra is carrying 211 HD channels across the fleet as of March 31st, up from 190 at the close of 2010.
Eutelsat Ups Guidance
As good as SES numbers were, it was Eutelsat which took the market by surprise, with the FSS operator telling analysts that it would exceed its already upbeat guidance, and by a decent margin. Eutelsat also said that a long-running squabble between Deutsche Telekom (and Media Broadcast) over frequency rights at the Astra second orbital position of 28.2 degrees East, where Eutelsat operates its Eurobird satellite alongside at 28.5 degrees East, is being submitted for arbitration before a International Chamber of Commerce tribunal. The rights to certain frequencies at this orbital position are currently exploited by Eutelsat within the context of an agreement dating from June 1999 between Eutelsat and Deutsche Telekom (which has since transferred its satellite activity to Media Broadcast).
A little history: The DFS-Kopernikus fleet, as far as operational/frequency rights are concerned, went to SES Astra for K-1 and K-3 (at 23.5 degrees East) following an agreement signed around 2000. However, K-2s frequencies, which operated at 28.5 degrees East, went to Eutelsat following their agreement with Deutsche Telekom (DT) in 1999. The deal with DT, signed on June 30, 1999, enabled Eutelsat to take over the DFS Kopernikus 2 satellite at 28.5 and to subsequently deploy a new Ku-band, 24-transponder satellite at the end of 2000. Cheekily, at the time, Luxembourgs PTT contracted for many of the transponders which they immediately sold on to SES Astra!
Indeed, Mr. de Rosen was able to show that revenues grew (compared to the same period last year) in all segments of Eutelsats business, with double-digit growth in its Data, Value-Added and quite spectacular expansion from its Multi-usage segment. Q3 numbers were up 10 percent to 295.2m euros, and nine month revenues to March 31st rose by 12.2 percent to 871m euros. Q3 video revenues rose from 189.6m euros last year to 198.5m euros.
Eutelsat says two other key video neighbourhoods attracted new customers. At the 16 percent East position, notably covering Central Europe, the leading telecom operator in Croatia selected Eutelsat to optimise the footprint of its TV platform in areas beyond its DSL network, particularly in the Adriatic archipelago. Elsewhere, one of Russias principal suppliers of uplinking services for payTV platforms and channels selected Eutelsats video neighbourhood at 36 degrees East, the leading orbital position serving Russia, to launch a new platform.
The operator said video applications continue to benefit from positive long term global trends including the growing number of homes equipped for DTH and the increasing number of TV channels worldwide. As of March 31, 2011, Eutelsats satellites carried 3,835 channels, up from 3,539, a year earlier, an increase of 8.4 percent. The number of HD channels broadcast by the fleet stood at 210, up from 120, an increase of 75 percent over the previous 12 months.
An additional four satellites are currently under construction: W6A, W5A, Eurobird 2A and W3D. These satellites are scheduled to be launched between September 2012 and June 2013.
Morgan Stanleys advice to investors on May 11th spoke of it remaining overweight in Eutelsat (and SES) and the bankers being upbeat on Eutelsats performance. Eutelsat plans to launch an additional six satellites by the end of calendar Q1213, after having successfully launched Ka-Sat in December 2010. These satellites will increase the groups transmission capacity by 273 transponders on top of the 82 spot beams on Ka-Sat. For modeling purposes, we assume one spot beam equals one transponder. This means that between December 2010 and June 2013, ETL will have increased its capacity by 355 transponders.
The banks forecasts look more than healthy for Eutelsat, growing beyond this years revised revenues of 1.169bn euros, to 2012s 1.253bn euros, 2013s 1.34bn euros, and 2014 reaching 1.41bn euros. By 2015, says the bank, Eutelsat should have annual revenues almost reaching 1.5bn euros.
Chris Forrester is a well-known broadcasting journalist and industry consultant. He reports on all aspects of broadcasting with special emphasis on content, the business of television and emerging applications. This includes interactive multi-media and the growing importance of web-streamed and digitised content over all delivery platforms including cable, satellite and digital terrestrial TV as well as cellular and 3G mobile. Indeed, he has been investigating, researching and reporting on the so-called broadband explosion for more than 25 years. He has been a freelance journalist since 1988.