NSR’s Satellite Operator Financial Analysis (SOFA), 5th Edition finds that as GEO-HTS payloads continue to become more prevalent, satellite operator business models are encountering dramatic effects, including altered CAPEX cycles, lower backlogs, and falling revenues per transponder.
“GEO-HTS payloads have had a dramatic impact on CAPEX cycles of satellite operators. We now see operators being able to minimise CAPEX by investing in one big GEO-HTS payload rather than 2-3 FSS satellites, and still end up with more capacity, which in a vacuum is a good thing”, states Blaine Curcio, Senior Analyst and report author.
“What we’ve not yet seen is the end result—do our traditional FSS satellites with transponder counts in the dozens just become obsolete? Or is there still value in having 30 traditional transponders on a satellite, a few orbital slots away from one that has 300? These questions become important when even the 30 transponder satellite is, on paper, a $250 million asset”, adds Curcio.
The above scenario becomes especially appealing when operators have significant debt loads—i.e. Intelsat or Telesat—or when the operator has few traditional in-orbit assets to lose—i.e. a new market entrant such as YahSat or Avanti. “We are starting to see the impact that GEO-HTS payloads can have on revenues. Thaicom sees over $100 million per year from IPSTAR. YahSat’s revenues per operational satellite metric exceeds $100 million, and Avanti sees >$40 million revenues per satellite at a self-admitted 20-25 per cent fill rate. These are huge numbers compared to anything that a traditional FSS satellite could come to expect, and this is still only the beginning”, says Curcio.
Beyond this, 2014 saw the Big Four’s overall revenue decline by over $200 million in US Dollar terms, with Intelsat leading the charge with significant revenue woes, and a strong dollar weakening decent revenue growth at SES and Eutelsat. Regional players performed better overall, with some outliers losing significantly due to currency exchange rates, but most faring quite well. Growth continues to come from GEO-HTS payloads, though whether a dramatic drop in pricing will really expand the total addressable market remains up for debate. MSS operators covered in this study, as well as a number of FSS operators, will need to rely on niche value-adds such as connectivity anywhere or high throughput per beam, but how long this will remain a justification for higher bandwidth costs is unclear.