[SatNews] According to Euroconsult’s latest research report,”Satellite Communications & Broadcasting Markets Survey, Forecasts to 2022,” the FSS sector is transitioning into a new environment with increased competition between satellite operators and greater uncertainty on demand usage and associated pricing conditions.
This increased competition results from investments by both leading operators and established regional operators, and from the emergence of new national systems in emerging regions. While opportunities exist in most application domains and regions, seizing them depends upon the satellite operators’ ability to adapt their current strategies.
“2012 saw a global capacity growth rate slightly over 4%, a similar rate to that of 2011 but lower than growth observed in the five previous years. “Regular” transponder capacity saw 1.9 percent growth over that of 2011, a ten-year low,” said Pacôme Revillon, CEO at Euroconsult.
2012’s slowdown in “regular” satellite capacity was caused by:
- Emerging markets reaching a first level of maturity
- The reduction of military operations in the Middle East
- Launch delays for several satellites
- Increased usage of HTS capacity capturing some “regular” capacity traffic
Growth in capacity leases was again driven primarily by emerging regions. Latin America, Africa and South East Asia were the fastest growing regional markets last year. “Regular” capacity usage decreased in both North America and Europe, proving both to be mature markets for wholesale operators.
Revenues of FSS operators reached $12 billion last year, while the industry’s weighted average adjusted EBITDA margin slightly grew to just over 75%. M&A activity has recently accelerated; Arabsat acquired Hellas Sat in 2012, and Eutelsat acquired Sat-GE in 2012 and Satmex in 2013. Consolidation in the industry is currently led by strategic investors seeking better access to growth opportunities. Strategic partnerships and ventures should also multiply in the sector, driven by the need to access/share spectrum resources and optimize capex spending. The number of operators should ultimately remain stable, as new state-owned national operators in fast growing regions should compensate for the disappearance of acquired companies.
Emerging regions and HTS systems are major revenue growth engines for the FSS industry. Overall revenues from “regular” capacity are expected to reach a 2.9 percent annual growth rate over the next ten years, surpassing the $14.7 billion mark by 2022. The fastest growing regional markets should be Latin America, parts of Asia and Africa. Revenues from regular capacity in Latin America could surpass those of North America over the next ten years.
The market value of HTS capacity is expected to triple within the next two years to reach $1.6 billion by 2014. Following the take up phase, market value of HTS capacity should increase at a double digit rate over 2016-2022 to reach $5.7 billion by that time. Growth in revenues should be lower than that of capacity, as we anticipate an overall decrease in capacity prices to serve data driven communication needs. A large part of the market value should however be operated by vertically integrated companies and public systems, which could limit the addressable market for wholesale satellite operators. “A large part of the revenue growth will depend on the ability of operators to support the development of new services and usage, and on their positioning with regards to terrestrial networks and non-commercial satellite systems,” said Revillon.
