NSR’s Satellite Industry Financial Analysis, 10th Edition report, released today, finds an industry enduring stunted growth with bankruptcies and revenue declines across the satellite operator and service provider segments. However, some gains can be seen with Hughes, ViaSat, and SES all registering large wins on the back of Broadband, Mobility and Gov/Mil deals. While Integrated Operators and some data segments continue to post gains, video continues to struggle, shrinking the global satcom industry by 2.7% in 2019.
Industry leaders like Speedcast and GEE were unable to weather the COVID-19 headwinds with low cash reserves - declaring bankruptcy, while Gogo sold its commercial aviation division to Intelsat in mid-2020. Notable bankruptcies also included Intelsat and OneWeb, which could not restructure debt or raise fresh funds.
But there is a silver lining in all this. The earlier acquisitions of Inmarsat and Asiasat in 2018, the ST-Newtec deal, recent bankruptcies, along with the Intelsat-Gogo deal, all signal a new growth period from 2021-22. With LEO capacity from SpaceX, OneWeb in 2021-22, and Amazon & Telesat launching in 2024, the satcom industry finds it imperative to consolidate to control their captive markets and offer higher economic value.
“Essentially two options remain accessible to operators today: Either build a full-fledged services arm and integrate offerings; OR build VHTS/non-GEOs and lease in bulk to anchor tenants,” according to Gagan Agrawal, Senior Analyst and co-author for the report. ‘’As companies like SES and Intelsat (C-band proceeds), Hughes (Net Cash), ViaSat (3 VHTS), SpaceX Starlink ($47B valuation) and Amazon Kuiper ($10B committed) build war chests for the next decade, smaller operators will find it difficult to compete on price per bit and be forced to consolidate. The industry has now completed its transition,” adds Agrawal.
“Looking beyond the COVID-19 headwind, both IFC and Maritime sectors are expected to rebound to a growth path on the back of mass vaccination”, remarks Joseph Ibeh, NSR Analyst and co-author of the report. “However, competition for market share will become much fiercer following the recapitalization of insolvent operators and consolidation.”
Investors’ confidence is expected to remain low as operators’ backlog continues to reduce with persisting low ROCE, and they invest in the next CAPEX period (2021-22). Simultaneously, opening of India and other markets, along with new verticals, will enhance addressability and boost confidence beyond 2022.
Comments