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Thai firm's hopes soar with
satellite launch
By Suzanne
Nam, ThaiDay
BANGKOK - Though Thursday's
launch of Shin Satellite's iPSTAR-1 went smoothly,
analysts warn that it comes too late to capitalize
on the region's demand for high-speed data access.
Built at a cost of US$400 million by American
company Space Systems/Loral, iPSTAR-1 is the
largest commercial satellite ever put in orbit.
The satellite has a bandwidth capacity of 45Gbps
and is able to transmit and receive information
from 22 countries in the Asia-Pacific region.
Shin Satellite Plc - a subsidiary of Shin
Corp, the telecom giant owned by the family of
Prime Minister Thaksin Shiniwatra - is betting its
future on anticipated subscriptions. But with only
10% of the satellite's bandwidth sold as of
Thursday, iPSTAR-1 may not be able to deliver the
profits it has promised. "We will need to operate
at about 20% capacity in order to break even,"
said Richard Jones, head of investor relations at
Shin Satellite. The company is currently
negotiating with companies in China and India and
says it is close to inking more subscription
deals.
Although satellites can offer
services to areas where land lines necessary for
conventional broadband - like cable or DSL -
cannot be laid or are prohibitively expensive,
those markets may not be sufficiently large to
make the project profitable. Regional demand for
Internet and television is growing every day. But,
analysts warn, given conventional DSL and cable
providers' head start, satellite services may
never be able to catch up unless they are the only
option available.
"It would have been
better had [iPSTAR-1] been launched three years
ago. The market for satellite broadband is getting
smaller and smaller as the fixed-line guys grow,"
said a telecom analyst based in Bangkok on
condition of anonymity. Although satellite
television is successful, no company in the world,
including Lockheed Martin, Motorola and Alcatel,
has been able to mass-market a satellite-delivered
Internet service, a key component of Shin
Satellite's business strategy.
The company
says that iPSTAR-1 will allow it to offer
broadband services for prices substantially lower
than anything else available. "We intend to be
competitive with ADSL pricing. We can offer lower
prices because [the technology our satellite uses]
is priced lower than conventional satellites and
is more efficient," said Tanadit Charoenchan,
chief financial officer of Shin Corp. "Once the
bird is up in the sky and people have confidence
in our technology ... we should be able to enter
into more contracts."
Though getting the
bird up in the sky was the first hurdle, it
wouldn't be the biggest, said the industry source.
"The biggest risk right now is the business risk
involved in selling broadband satellite," he said.
Nevertheless, analysts say the successful launch
could bode well for the company. "The successful
launch is obviously good news for the Shin Group
and alleviates some of the concerns that have
created some overhang on the stock," said Andy
Chan, a telecom researcher at JP Morgan Thailand.
(Copyright 2005
ThaiDay) |
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