Satellite Industry Seen as Strong, Researchers Say
The satellite industry overall seems to be weathering the financial crisis, according to recent reports by the Satellite Industry Association and Euroconsult, a telecom research firm (CD June 9 P 10). But analysts and experts said parts of the industry that rely more directly on consumers seem more vulnerable.
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In its annual report, the association said the satellite industry had 19 percent revenue growth in 2008 to $144.4 billion. Revenue growth averaged 14.2 percent 2003-2008, it said. Euroconsult said it estimated 1,185 satellites will be built and launched 2009-2018, about 50 percent more than the previous decade.
Recent startups and the mobile and broadband satellite industries don’t seem as secure as the rest of the industry, analysts said. They're “less proven on an operating and cash flow basis,” said Armand Musey of the Summit Ridge Group. Peggy Slye, Futron’s director for space and telecommunications, who compiled the SIA report, said, “Those are more consumer-centric services, and as a result they feel economic changes faster than the rest of the industry.” She said the satellite industry tends to feel changes two years after the economy.
Broadband and mobile satellite executives had mixed opinions on the analysts’ perceptions. Lisa Scalpone, WildBlue’s vice president of legal and government affairs, said demand for the company’s service remains strong, but said a lack of upfront capital could prevent it from launching additional satellites, leaving it hopeful for broadband stimulus funds. “The satellite industry requires a lot of upfront capital. We have to get that money to improve our services.”
Mobile satellite services tend to be less affected than others by economic problems, because of the service it provides to the military and remotely located businesses, said Diane Cornell, vice president of government affairs for Inmarsat. But the recent bankruptcy of ICO and the loan that Globalstar received from the French government highlight the “challenge of raising capital right now,” she said.
Larger satellite providers like SES Americom-New Skies said having long-term contracts makes them more “resilient” to the economic crisis. SES spokesman Yves Feltes said the company’s efforts in emerging markets like Africa and the Middle East will also keep it busy. A Lockheed Martin spokesman said the U.S. government provides 85 percent of its revenue, providing “relative insulation from the global economic crisis.”
Slye said even companies like SES could run into trouble if the economic situation doesn’t improve. The “satellite industry heavily depends on the availability of credit,” she said. She said that could affect even companies like SES if the economic situation doesn’t improve.
Even if the capital markets don’t improve soon, the industry will find that “there is money (out there) for good projects,” said Arnold Friedman, senior vice president of marketing and sales for Loral. At the least, “satellites will need replacing.”