AsiaSat forced to trim prices

Hong Kong-based AsiaSat has reported record revenues for 2012, but warned that a major customer had negotiated “considerably lower” lower transponder lease rates which will kick in later this year, and as a result this current year’s numbers will suffer.

AsiaSat is somewhat stuck in that its fleet is operating at near full capacity (79 per cent) and consequently cannot – at the moment – seek significant new business to replace the reduced revenues.  This position will improve when AsiaSat 6 and AsiaSat 8 are launched in 2014.

“The contract with one of our longest-running customers was renegotiated at terms considerably lower than the previous contract due to the change in prevailing market rates. The new terms will take effect in mid-2013, and we will subsequently face a drop in revenue from this customer,” said the company.

“We [have] begun to see some impact among government customers who tightened budgets, despite the gradual recovery in worldwide markets. Some of our smaller customers who struggled to find funding were especially cautious when signing or renewing contracts, and certain deals were more difficult to conclude due to aggressive competition,” added AsiaSat’s statement.

The total number of transponders leased or sold as of 31 December 2012 was 105 (31 December 2011: 108) with an overall year end utilisation rate of 79 per cent (31 December 2011: 82 per cent). New contracts won during the year under review amounted to a total value of HK$162 million (2011: HK$551 million), while renewed contracts were worth HK$2,434 million (2011: HK$607 million). New and renewed contracts combined amounted to HK$2,596 million (2011: HK$1,158 million). The increase in total new and renewed contract value was mainly the result of renewals by major long-term customers during 2012.

As to specific numbers, AsiaSat reported 2012 revenue of nearly 1.9 billion Hong Kong dollars ($243.2 million), up 10 per cent from 2011. But some 311 million Hong Kong dollars of that came from Indian customers whose business with AsiaSat is the subject of the tax litigation.

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