The satellite industry is the latest sector to find itself drawn in to the sub-prime loans crisis emanating from the U.S., with restructuring likely to slow down dramatically and new projects harder to get off the ground, according to speakers at a major regional event in Bangkok.
Delivering a keynote address on the opening day of the Asia Pacific Satellite Communications Council yesterday, Shin Satellite chairman Dr Dumrong Kasemset said that talks with the investment community in Paris last week had suggested that much of the available capital had been funneled into sub-prime loans.
“From my talks with the investment community, the losses have caused them to slow down in other sectors. This will undoubtedly slow down the pace of development [in the satellite sector],” he said.
The financial squeeze has already had an impact, Dr Dumrong noted, suggesting that some restructuring and acquisition activity had already been put on hold or cancelled. “The primary driver of our industry has been private equity and one implication is that buying and selling will be curtailed and I believe some pending deals will not close,” he said.
The three-day annual ASPCC conference runs until Thursday and also includes an industry awards evening during which Dr Dumrong is expected to be named Satellite Executive of the Year. It’s only the second time that the ASPCC meeting has been held outside of Korea and the first time it’s been held in Thailand.
The sub-prime loan crisis also kicked off discussion in a CEO roundtable that followed Dr Dumrong’s keynote address, with everyone agreeing it would have some affect, although not all negative.\ “Who would have thought a mortgage crisis could affect the satellite community?” asked David Bross, chairman of the ISCe Satellite Investment Symposium, in kicking off the CEO roundtable.
Paul Brown-Kenyon, COO of Malaysia’s MEASAT Satellite Systems, summed up a lot of the panel’s views when he suggested the crisis might be good in keeping speculators out of the market.
“I think debt has been too cheap and a lot of firms have been trying to use that debt to make short-term money. In the long-term, it could be better for the industry,” he suggested.
On a more positive note, Dr Dumrong noted that demand for satellite services had picked up last year, with a 5% rise in terms of volume and 8% for revenues. He said looking forward that broadcasting would continue to be the main platform driving demand, but also suggested that other drivers would come from military applications as well as corporate broadband services and 3G/Mobile TV services in the L and S bands.
He also warned delegates that moves to re-allocate portions of the C-band spectrum for wireless broadband services such as WiMax could affect “billions of viewers” of satellite TV. He said the industry should lobby regulators ahead of November’s World Radiocommunication Conference (WRC) in Geneva.
