The prospects of some sort of merger of satellite operators in North America, between Charlie Ergen’s Dish Network and AT&T’s DirecTV, or perhaps a European consolidation between SES and Eutelsat, has generated plenty of media comment over the past weeks.
However, a virtual meeting of senior executives on September 24 at the Avia (Asia Video Industry Association) Satellite Industry Forum, was downbeat on the prospects for mergers especially in the Asia-Pacific region.
Roger Tong, CEO at AsiaSat, argued that there are very limited opportunities in the market right now as new projects are being put on hold and some major Chapter 11 restructuring going on with entities such as Intelsat, Speedcast and Global Eagle [in Chapter 11 reorganisation].
“We expect more in the pipeline, partly for companies to clean up their balance sheets and partly because they are really facing an unprecedented challenge,” stated Tong.
“AsiaSat has always been conservative and highly focused. It is a double-edged sword, but the company will continue to exercise our diligence (financial prudence) in running our business and serving our customers as a reliable partner. I am a believer in survival of the fittest, we must build our business around the natural advantages of satellites instead of trying to follow the crowd. We are not changing our strategy but we are on the lookout for opportunities that make sense for AsiaSat,” Tong added.
Terry Bleakley (Intelsat’s VP/Asia Pacific) told the Forum that Intelsat, despite its Chapter 11 bankruptcy, was still able to move quickly when the right opportunity came along. That opportunity was buying the Commercial Aviation sector of IFE specialists Gogo for $400 million.
“We’re looking for opportunities where we can move from a wholesale model to get closer to our customer base,” Bleakley told the Forum. “That’s going to take time and is going to change the dynamic of our financial structure. As you move toward the end user, your EBITDA changes.”
Eutelsat Asia’s chief executive Christopher Cazes stressed that Eutelsat’s philosophy was not to compete with its customers, but said that if the established satellite industry didn’t consolidate it risked being overrun by the ‘new’ entrants and competitors such as Elon Musk’s Starlink and Amazon’s Project Kuiper.
“If the traditional operators don’t consolidate or do more partnerships, we’re going to be overrun by these guys,” Cazes told the Forum. “They have deeper pockets than all of us have.”
However, Huang Baozhong, EVP at APT Satellite Holdings, spoke what many believe is the truth and saying that even though the Asia-Pac region badly needed satellite consolidation because there were too many small fleet operators, the fact was that many nations in the region had created regulatory barriers that made such consolidation unlikely.