Thaicom recently signalled a turnaround in its business as Thailand’s leading satellite operator posted its first profit in five years. SatelliteFinance’s Pauline Renaud speaks with CEO Suphajee Suthumpun about her plans to grow the company…
Thaicom recently signalled a turnaround in its business as Thailand’s leading satellite operator posted its first profit in five years. SatelliteFinance’s Pauline Renaud speaks with CEO Suphajee Suthumpun about her plans to grow the company further.
Pauline Renaud: Since you became CEO of Thaicom in 2011, what have been your key objectives for the company and which challenges have you faced?
Suphajee Suthumpun: The key objectives are to turnaround Thaicom and strengthen its business to grow sustainably and profitably, and we aim to be the leading Asian satellite operator, a company that everyone will be proud of. To achieve that goal, we focus on careful planning, an internal restructuring from product-centric operations to function-based activities, and improved efficiency throughout all our businesses. For the challenging things, we’re now taking another step to expand our fleet of satellites and start looking at regions where our unique skills and expertise can be utilised to provide world-class services, combined with our extensive knowledge of the Asian Pacific region and the markets in Europe, Africa and central Asia, has allowed us to build a strong culture of excellence in technology. Thaicom aim to strengthen its businesses strategies for a sustainable growth with a good operating result by these four key efficient strategies:
- Improve Thaicom’s organisation structure and operational efficiency, including the improvement in its efficiency to manage costs and expenses. Focusing on market segment, partners and providing end-to-end solutions.
- Capability for innovation; Thaicom initiates the new technology and innovation for sustainable growth.
- Create understanding and good relations among key stakeholders of Thaicom, as an Asian leading satellite operator that continually utilise new technology and innovation to meet customer requirements and satisfactions. The company also set up the corporate good governance and corporate social responsibility policy to ensure a sustainable growth for the company and its communities.
- Thaicom intends to be a high performance organisation with highly qualified personnel by improving itself to be a ‘great workplace.
PR: You previously said that the business is refocusing on being a pure wholesaler rather than retail provider, is this still the case and how has this progressed?
SS: Thaicom clearly defines market segment where the firm has a significant presence and we will do what fits in each market, including private enterprises, government agencies and collaborating with partners in the retail sector such as in Japan and India. We focus on enterprise customers; in Thailand/Malaysia/China, we focus on wholesales; in New Zealand/Australia/Philippines, we focus on retail, etc.
PR: What are the benefits and difficulties of being a public company? How is your relationship with your main shareholder InTouch?
SS: Beyond the obvious reason of raising money via an IPO, being a public company offers non-financial benefits as well. With the greater scrutiny that occurs once a company lists on a stock exchange also comes greater transparency, and that transparency translates into the potential for building greater trust in the company’s products, services and management team. The very public nature of a company also means that its reputation is more readily known around the world, which may make it easier to enter into new markets, or launch new products.
Our relationship with our main shareholder, Intouch, is a good relationship. Intouch holds 41% of Thaicom’s shares, while the remainder is held by approximately 13,000 retail investors and funds. The Intouch group of companies is the second largest group of companies on the Thai stock exchange in terms of market value. Thaicom, as part of that group, can leverage the synergies within the group and focus on developing and delivering quality products and services.
PR: Does InTouch’s 41% stake in the company now count as foreign investment?
SS: It’s still being treated as a Thai company.
PR: Are you seeing any impact from the current lawsuit regarding Shin’s previous moves to reduce its ownership in Thaicom?
SS: Thaicom and InTouch always comply with all rules and regulations and we are confident in our case.
PR: Has the current government shown any interest in acquiring Thaicom, as the previous cabinet did in 2010?
SS: Not to our acknowledgement.
PR: Does the government hold a golden share?
SS: The government never held a golden share in THAICOM, but instead, under our concession agreement with the Ministry of Information and Communication Technology, received and continues to receive a share of our revenues. At present, according to the concession agreement, we pay the MICT 20.5% of our revenues realised on the sale of transponders and bandwidth.
PR: Thaicom said that at the end of Q1 2013 that it had liabilities of about Bt7bn (US$223m). How are you looking to manage this debt going forward? Do you need to refinance any of it?
SS: Focusing on the liabilities is only part of the story, and to put it into a proper perspective, we should also look at our assets and equity. At the moment, the company has a debt to equity ratio of 0.52, which is a very healthy level. At the same time, part of the liabilities also includes a 3.7bn Baht (US$115m) bond that is due in November of 2014. Looking at this issue at the moment, we will repay this bond on time from our cash flows, which are very healthy. We had a similar amount in bonds that we repaid in November of 2012, also from our own cash flows. With the repayment of the bond in 2014, our D/E will drop down further, to around 0.40, so overall, a very healthy situation.
PR: Also in its financial results, the company said it had Bt3bn (US$96m) worth of cash. How are you looking to use that money? Would it be in dividends or are you considering any potential acquisition opportunities? If so, would these be transformational or bolt-on acquisitions?
SS: Currently, Thaicom has many potential projects in the pipeline. In addition, Thaicom has an obligation to repay the loan for Thaicom 6 and, as mentioned, the bond debenture in Y2014. The total of these two items is US$240m. Therefore, some cash need to be reserved for those purposes. With regard to dividends, we have no plan to pay any interim dividend this year, but the question will be considered again next year subject to the company’s performance.
PR: Thaicom is currently working on a new satellite, Thaicom 7. Do you expect it to be launched on schedule given the delays to SpaceX’s commercial launches?
SS: We have been working closely with our partner, AsiaSat, on the Thaicom 7 project, and we are positive that it will be launched on schedule in H1 of 2014.
PR: Is this a replacement satellite or will it provide incremental capacity and, if so, which new markets do you expect to target?
SS: Thaicom 7 will provide us additional capacities. It will allow us to optimise traffic among our fleets. We plan to migrate telecommunications traffic from Thaicom 5 (at 78.5E) to Thaicom 7 (at 120E) in order to avail Thaicom 5 capacity for broadcast applications. In the short-term, Thaicom 7 will target the telecommunications segment as well as the content delivery network (CDN) such as the digital cinema package delivery, which is the distribution of Hollywood movies throughout the region. In the long-term, we plan to develop “hot bird” strategy for the broadcast segment to create stickiness at 120E.
PR: Is Thaicom looking at doing similar deals both with Asiasat and other operators?
SS: We are open for collaborations with partners. It will depend on whether there is any opportunity that will make business-sense for us.
PR: Have you already ordered Thaicom 8/Ipstar 2 and, if so, is it with Orbital Sciences? Will it be straight Ka-band or have some Ku as well?
SS: Regarding the Ipstar 2 satellite, I’ve given two criteria to the team. First the utilisation of Thaicom 4/Ipstar must reach 40%, which it already did (the committed bandwidth utilisation of Thaicom 4/Ipstar is now ~54%) and second we must have at least 50% pre-commitment from customers. Now we are still in the project feasibility study process. We are in discussion with prospect customers for the possibility to pre-commit the capacity. By year end, we should have more information on this.
PR: Could you describe Thaicom’s participation in the Australian NBN project, via its subsidiary Ipstar? Is Thaicom looking to have a role in that project beyond the interim service?
SS: The NBN Co. mission is to provide a quality broadband service to 100% of the population using next generation fibre, fixed wireless and satellite technology. There are two phases to the NBN satellite service: interim and long-term. Our subsidiary, Ipstar Australia, signed a 5-year contract with NBN Co. to provide Thaicom 4 (Ipstar) capacity as the interim bandwidth solution since 2011. Regarding the long-term solution, NBN Co. decided to launch two of its own satellites and has already selected the satellite manufacturer as well as the ground equipment vendor. However, we are keen to continue supporting NBN Co. in case they wish to use Thaicom 4 (Ipstar) as a back-up satellite or to support any additional requirement prior to the commercialisation of the new satellites. In addition, we are developing the corporate market in Australia.
PR: Has Thaicom 9 been ordered yet and will it be located at 50.5E? When are the rights to this spot due to expire?
SS: Thaicom is studying the opportunity for upcoming satellites including frequency coordination. We will keep SatelliteFinance updated upon its conclusion.
PR: Do you have any other orbital slots that you will need to occupy within the next few years to avoid losing them?
SS: No but Thaicom continuously consider all aspects of resources including the orbital slots to ensure a sustainable growth of the business.
PR: Do you believe the Asian satellite market is too fragmented? Do you expect there will be consolidation and do you anticipate playing a role if so?
SS: Asia is the world’s largest and most populous continent. In terms of satellite market, I believe the number of key players is optimal. And I have seen some consolidations in the past, and I believe more will come. And if there is an opportunity, we will certainly consider it.
PR: Do you think the governmental need for national champions continues to stymie any likely consolidation? Do you expect to see mergers between your competitors?
SS: Regulations will continue to play an important role in the region. We will have to wait and see if there is any development within the region.
PR: How much of a competitive threat do you see in the region from the global operators, such as SES and Eutelsat?
SS: Not much. Again, regulations will play an important role. I am positive that the key Asian players will continue to dominate the market.
PR: Would you consider looking to expand outside of Asia to other fast growing regions such as Africa and Eastern Europe? Are you considering more China deals?
SS: We have been providing services to customers outside Asia since the launch of the Thaicom 3 satellite in 1997. With Africom by Thaicom, we have launched a satellite brand for Africa. Africom-1 is the C-band mission on Thaicom 6 to provide African broadcasters and telecom operators with a full range of end-to-end satellite communication services. The launch of Africom by Thaicom and Africom-1 is a strategic move by the company as we expand our services to regions beyond Asia, bringing with us 20 years of experience in providing premium satellite services and solutions. That said, Asia remains our strong foothold with “hot bird” broadcast satellites at 78.5E and a broadband satellite value proposition at 119.5E.
Regarding China, we expect to finalise the deal with Synertone (VAST) within September as per the contract. That is our main focus at the moment.
