SES aims to launch its latest Asia-focused satellite this year as it looks to further tap into the rapid ascent of the region’s middle class.
Deepak Mathur, commercial SVP for Asia Pacific and Middle East, discusses the fleet operator’s approach to…
SES aims to launch its latest Asia-focused satellite this year as it looks to further tap into the rapid ascent of the region’s middle class.
Deepak Mathur, commercial SVP for Asia Pacific and Middle East, discusses the fleet operator’s approach to the Asian market, and how satellite will remain relevant as new verticals and applications come online.
Jason Rainbow: How are you looking to grow in Asia – organic, inorganic or a mix of both?
Deepak Mathur: We have grown organically since our entry into Asia, and now have a fleet of six satellites over Asia which will become eight over time. One is going up later this year on a Falcon to 108.2E. We have another one that’s going to 95E. Organic is very much a part of how we are growing, we will continue to do that.
We started out in Asia with basically one satellite more than a decade ago, and now reach about 250,000 VSATs and 44 million subscribers for DTH. We’ve grown our presence and footprint in Asia tremendously.
Inorganic growth in Asia is difficult. One of the reasons is that the orbital slots are owned by governments that are very keen to continue to have their national programmes. Some of them for strategic reasons, some of them are for national pride reasons – which are perfectly legitimate.
But I think that makes consolidation and the ability to grow inorganically in Asia more challenging. There are exceptions, but they are few. There’s only one private equity-owned business that has an Asian footprint – that’s one [ABS]. Australia’s Optus was made available for sale by SingTel – that’s a second. And there is a third player that has a private equity owner but there’s a golden share which is owned by the Chinese government [AsiaSat].
On an opportunistic basis, if something interesting comes up then SES will absolutely take a look at it. But we will not overpay, because we’re building a great franchise and a great business by growing, methodically, step by step.
JR: Is the way to grow in this region beyond organic growth more about striking partnerships then?
DM: Absolutely right, we’ve seen obviously the AsiaSat/Thaicom deal where there was cooperation, we’ve seen Measat buy IP Star capacity for Malaysia, although that’s more of a long-term payload deal rather than pure cooperation.
I think that is the case where there is orbital slot synergy. I think what really drove these initiatives is a situation where party A had 50% of the Ku and party B had 50% of the Ku, and they decided, very correctly so, that the financials made a lot of sense, in terms of jointly procuring a satellite and managing the programme.
Those opportunities come about very uniquely, because they’re dependent on spectrum rather than will. We would love to cooperate, and I think it is very much the way forward, but there has to be the right mix of spectrum that enables that to happen.
For example, at 108.2E we have a satellite called SES-7 that has a Ku band payload on it, but the S-band payload is owned by Indovision in Indonesia. This is very similar to what Thaicom and AsiaSat have done, where they brought their spectrum to the party and we brought ours to the party, and it made economic sense for both of us to work together.
Cooperation is clearly the way forward but it can only work when there is this synergy of orbital filings.
JR: Are there any partnership opportunities that you’re looking at now in Asia?
DM: There’s always recipes floating around but nothing is in the kitchen at the moment.
JR: You spoke about governments in Asia being very keen to hold onto their national space programmes. In contrast, governments in Europe seem to have little problem with working with commercial providers for defence purposes. Indeed, you have a military joint venture with Luxembourg called LuxGovSat. How far away are we to seeing something similar in Asia?
DM: The most favourable scenario will involve a country that doesn’t have a national programme that is looking for connectivity for its defence forces. And one of the reasons this is happening in Europe is that countries like France and Germany have consolidated their national programmes. They realised satellite was not strategic to what they needed and that the best avenue was for them to be able to procure capacity when and where they needed it.
Another possible situation might occur when countries which have national space programmes in place require connectivity where these programmes currently do not cover. Let’s say the Japanese forces are providing logistical support operations in the Middle East. They don’t have a satellite that covers that region so they’d seek to work with a commercial operator.
I think it starts there and then it’s an incremental evolution. I would say that we’ll probably see more of this in five to seven years. The countries with very large and significant satellite programmes – India, China and Indonesia – might take a little bit longer than that. As they become more comfortable with the idea of using commercial capacity then it will become more common.
JR: SES is best known as a satellite TV company, but in Asia the split between DTH and data is 50/50. Why is that?
DM: When we ventured into Asia a decade ago, DTH was still very much in its infancy, and we were able to leverage our expertise and know-how working with European broadcasters to ride the Asian DTH boom we have witnessed in the past five years. We are today the number one satellite provider for DTH in Asia.
At the same time, there was also a clear opportunity on the data side of the business due either to inadequate communications infrastructure, or massive geographical challenges to alternate, terrestrial or fibre infrastructure – imagine trying to fibre-up even a tenth of the Philippines’ 2,000 inhabited islands.
This is unlike Europe where we essentially introduced the concept of DTH digital satellite broadcasting in the 1990s, and continue to provide a high-quality viewing experience for our European audiences today. Additionally because communications infrastructure is quite well-established in most parts of Europe, the data business has remained relatively small in comparison.
JR: MEO satellite broadband start-up O3b Networks is also looking to provide data services to unserved populations. What role will this company play in SES’ future?
DM: O3b Networks is a part of the SES portfolio that enables us to deliver the right type of solution to the requirement. We would never be able to drop similar services with a geostationary satellite to a remote island in Indonesia, at least not cost effectively as it’d use a third or a half of the capacity on a traditional satellite.
The ability to do that with one single beam with O3b is a game changer because it means, in a traditional environment, the government of Indonesia or that village would have never bought that service otherwise. They would have been happy with the 10Mb connection they were getting because there was no financial ability for them to pay for anything significantly more.
So there are certain things for which O3b is the perfect solution, there are certain things where spot beams are the perfect solution, and there are certain things where wide beams are the perfect solution. Its unique solutions will co-exist with what I believe is ideally what the customer wants, which is the lowest cost per bit for that application.
You know, traditionally our business has been about ‘one size fits all’. Today, we have to be able to deliver cost-effective services if we want scale. And that’s why I believe satellite will become more relevant because it will create the opportunities for scale if we can deliver the right cost for the service being delivered.
JR: Do you have any concerns over the potential to oversupply Asia with capacity with technology such as HTS?
DM: HTS is the right solution to expand the role of satellite, or the size of pie that satellite can claim. Our traditional role was broadcast and unconnected places. By using HTS we’re moving into a proposition where we’re widening the scope of the market, where we’re now able to play in a near-telco space. We’re now able to provide cost-effective cellular and internet backhaul.
Our new hybrid satellites with HTS payloads were developed after we sat down with our VSAT customers in Asia and told them we were thinking of a full-HTS satellite. After showing them what that would look like they said that, actually, for most of their network the shape beam works better, because it enabled them to make the most of carrier-in-carrier efficiencies. In an HTS environment you can’t use that technology, because each remote is not on the same transponder as the hub. They’re on separate transponders.
So our customers told us that, for certain applications, they need to maintain the shape beam, but for some things they wanted the spots. So we married the two together.
I think what we’ve done is a little bit different to the rest because, if you look at the other HTS systems, they’re pure HTS systems. That means that, whatever component of broadcast you have, it has to be replicated equal to the number of spots. Over Indonesia, if you were sending 50% common information, you have to send that 12 times for the 50%, and then you have the efficiency for the remaining 50%.
We realised that the right answer is to actually put the best of what they love about broadcast and what they love about the spots and put it together on the same satellite. It’s not as efficient from a frequency reuse point of view, because the shape beams cannot be reused, but this is what our customers said they wanted. And what the customers want, we strive hard to work towards that for we believe in working together with them to fulfil their growth ambitions.
