Japan’s SKY Perfect JSAT has been branching out of the country as the satellite operator seeks new business models to grow beyond its domestic market. SatelliteFinance’s Jason Rainbow talks to its CEO Shinji Takada to learn more about the company’s…
Japan’s SKY Perfect JSAT has been branching out of the country as the satellite operator seeks new business models to grow beyond its domestic market. SatelliteFinance’s Jason Rainbow talks to its CEO Shinji Takada to learn more about the company’s new growth strategy.
Jason Rainbow: JSAT announced plans in 2014 to order five satellites. Where do these satellites fit in your company’s growth strategy, and how close are you to contracting them?
Shinji Takada: We have four satellites on order: JCSAT-14, as a replacement of JCSAT-2A, will play an important role to meet further demands from the areas including Far East Russia, South East Asia and Oceania. The satellite is to be launched in the 1H of FY2015, tripling the C-band capacity compared of the existing JCSAT-2A.
JCSAT-15 will succeed JCSAT-110 satellite which is utilised for our core DTH service “SKY PerfecTV”. JCSAT-16 will function as an in-orbit backup with its Japan shaped Ku and Ka-band beam. Superbird-8 will be located at the 162E orbital position to replace Superbird-B2.
JR: How is the group funding these new satellites? Has JSAT ever used export credit agencies in Japan or internationally?
ST: We have recently purchased satellites including these new four by cash on hand or operating cash flow rather than debt financing. We haven’t used export credit agencies.
JR: Are there any plans for a high throughput satellite and, if so, would you look to provide satellite broadband in Japan?
ST: While we do not have a firm plan yet, JSAT is seeking business opportunities not only with conventional satellites but also with HTS. Together with the advent of SpaceX and more commoditised electric propulsion technology, we have seen the whole industry changing dramatically in recent years. We see it as a great opportunity and aim to take advantage of it to grow our business, especially in emerging Asian countries. The Japanese market seems a bit challenging due to the fibre networks installed throughout the country, but we should keep looking into what we should and shouldn’t do with HTS.
JR: On the Sky Perfect services part of the business, will you be looking to offer 4K / UltraHD via the new satellites?
ST: We are going to launch two 4K/Ultra HD dedicated channels in March 2015 on our SKY PerfecTV Premium Service via current JCSAT-3A and JCSAT-4B satellites.
JR: How does the Sky Perfect relationship work with the JSAT operator side? Are there ever conflicts of interest, and have you ever considered splitting the two companies?
ST: Both business units share the same mind of growing our satellite and broadcast markets, such as the recent new development of 4K/Ultra HD. From JSAT’s point of view, we expect 4K can help transponder demands to grow since it requires a substantial number of transponders due to its high data-rate characteristic. For SKY PerfecTV, we believe that newly launched 4K commercial channels, which are to be the first 4K broadcast service in Japan, will make our SKY Perfect service attractive.
JR: JSAT is mainly focused on Japan, but recently has been branching out into new businesses areas outside the country, such as its disaster response system in Chile and Turkey. Is this due to growing pressure in your domestic market?
ST: The Chile and Turkey projects are a great example of our new business model, exporting the experience we learned from disasters that occurred in Japan. JSAT and other domestic VSAT manufacturers have developed reliable systems which can effectively secure communication needs/requirements at the most critical time. Rather than a pressure, it is our commitment to let other countries utilise our knowledge to have better disaster response systems.
JR: Where are you seeking further growth opportunities? Will you look to expand and diversify through organic growth, or through M&A?
ST: We put an importance on both organic growth and M&A. From the organic growth perspective, we are especially looking at overseas markets where satellite demand seems to still be strong in the Asia and Oceania region. Our upcoming JCSAT-14 will cover the entire region with incremental C-band capacity to accommodate these demands. As for our domestic market, we concluded with the Ministry of Defense a contract for procuring two satellites and this will contribute to our revenue growth in FY2015 and FY2016.
From the in-organic growth perspective, we never exclude M&A from our strategy options. We see it as an essential component of business growth, enhancing our core business and/or accessing new markets globally. We are continuously seeking those opportunities and carefully considering the right fit with our strategy.
JR: How will this new military venture change the split of revenues that JSAT receives between its government and commercial businesses?
ST: The two satellites are to be launched in FY2015 and FY2016, respectively, and capacity will then be sold to the Ministry in each fiscal year. Therefore, we see a substantial revenue increase for government-related business next fiscal and the following. The total contract price in this programme will be up to JPY122bn (US$1.026bn) through the total contract period from FY2015 to FY2031.
JR: What effect will plans by the Japanese government to invest more in space technologies that are useful for commercialisation have on JSAT?
ST: As a Japanese operator, we are very happy with the government’s effort to advance and commercialise space technologies. JSAT certainly hopes that such advancements will help us improve our service quality in a long term.
JR: What kind of businesses/projects are you considering outside your domestic market?
ST: We expect incremental growth by launching replacement satellites to 154E, where we have added new capacity in a broad Asian region. In addition, our plan is to expand our service coverage toward the east (i.e., Pacific Ocean Region) and west (i.e., Central Asia, MENA and Africa) by increasing marketing efforts and partnerships.
Partnerships and cooperation among satellite operators are important factors for our global strategy. I believe that, as unused frequency rights are dispersed over the arc, utilising those limited resources helps our industry grow as a whole.
In terms of the global market, mobility (maritime and aero) has been one of the key drivers, and we see this trend continuing at least in the coming year. HTS, or at least designing more efficient satellites by frequency reuse, would be essential for us to beat the competition.
JR: JSAT has ordered an H-2A rocket from MHI for the first time to launch a satellite in 2016. The company recently tapped SpaceX to launch JCSAT 16 for that same year. How competitive do you see Japan’s domestic launch industry becoming as the market becomes increasingly crowded?
ST: Generally speaking, healthy competition in any industry will bring benefits to consumers in terms of quality and pricing. As a satellite operator, we keep contributing to the space industry in cooperation with all the related parties, including launchers.
