Space Programme

Mohammed Omran, Thuraya’s chairman, expects 2004 to be a crucial year as the satellite mobile operator expands into new geographical and vertical markets. With moves into Asia and the aeronautical sector on the horizon, Thuraya has targeted 300,000 subscribers by the end of the year

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By  Richard Agnew Published  February 4, 2004

|~|thuraya1.gif|~|Mohammed Omran, Thuraya's chairman|~|UAE-based satellite mobile operator, Thuraya, was helped considerably in 2003 by the post-war situation in Iraq, giving it access to a new market without much in the way of existing telecoms infrastructure. Ongoing demand since the war helped the operator develop a customer base that it claims is now nearing 50,000 users after less than a year. Overall, Thuraya says the move helped it sell more than 200,000 handsets by the end of 2003, and the operator estimates that it is now serving over 185,000 direct users, up from 75,000 twelve months before. Without such a one-off boost, it is also aiming for the same level of growth during 2004. “Our target for 2004 is to exceed the 300,000 mark,” says Mohammed Omran, Thuraya’s chairman. “We think we have the tools to do that. We have a large number of service providers and new products… and our name is well known now. I always [look at] the GSM Association’s map of GSM coverage area. There are many countries in the Middle East and Africa (MEA) where there are no communications [networks] at all,” he adds. To reach this target, Thuraya has also set its sights further afield than MEA. The operator is planning to reposition the first of its two geo-stationary spacecraft in June to cover the Far East, followed by the launch of services there in September. Countries to be covered by Thuraya-1 will include China, Malaysia, Indonesia, Singapore, and parts of the Russian Federation, while its second satellite will focus on the Middle East, Africa and Europe. “We are working in accordance with the requirements of national regulatory authorities and will be selecting experienced service providers to represent Thuraya in these countries,” says Yousuf Al Sayed, Thuraya’s chief executive. “The introduction of Thuraya services throughout Asia is our first… step towards covering the world,” he adds. With Thuraya-1 having developed power loss problems, the operator has another trick up its sleeve if the satellite can’t handle the traffic. According to Omran, its third spacecraft will be readied by its manufacturer, Boeing, by the end of this year, and moved to cover the new region if necessary. “[Thuraya-1] has a problem but we are reducing the number of its beams and we have started manufacturing our third satellite, [which] will be ready before the end of the year. If the market happens to be greater than expected, we will move that satellite to Asia,” he says. Another obvious growth area where Thuraya is looking to ramp up its operations is Africa. In January, the operator announced a tie-up with existing shareholder, Sudatel, to create a joint venture to market its services in Sudan. The US$2.5 million company, 20% owned by Thuraya, has made the country a priority market, targeting 38,000 subscribers and revenues of US$30 million after five years. This, Omran expects, will come on the back of a surge in demand due to Sudan’s growing stability. The move, part of Thuraya’s efforts to bolster its distribution strategy, may also see the joint venture eventually expanding its focus out of Sudan. “When we first set up, Thuraya’s policy was to appoint service providers in key markets. We have reviewed these operations and [have] found that in Sudan it would be best to create a separate entity,” adds Omran. In Iraq itself, meanwhile, Thuraya is predicting further growth in 2004. The satellite industry as a whole is expected to have at least a ‘two-year window’ there, before it starts to churn traffic to the fixed and GSM sector once more network infrastructure has been repaired and installed. It is also expected that their satellite operators will have to focus more onto niche markets once the three regional mobile operators currently setting up their networks are allowed to go nationwide. “After two years, things will probably stabilise in Iraq,” says Roger Stanyard, a consultant at satellite industry research group, Interspace. “The mobile licences will last for two years, competition will come in and the market will eventually move away from satellite communications, leaving broadcast as the only major satellite application. Unless satellite providers can develop specialist applications, a lot of them may find Iraq a ‘five-minute pipedream,’” he adds. ||**|||~||~||~|Nevertheless, Thuraya and other satellite mobile service providers are expected to retain a role in rural areas of Iraq for the foreseeable future. “Thuraya has the advantage of its dual mode system and compatibility with GSM,” says Stanyard. “[Also,] cellular networks will be up and running in the main towns in the next few weeks, but in the countryside there’s still a security issue,” he adds. Omran says the provider has taken potential churn of its Iraqi subscribers to GSM networks into account. “We have certain advantages because we cover the whole country and have independence in the availability of our services. But we know some users will move when the GSM operators start up and have taken that into consideration,” he adds. To ensure ongoing revenues, Thuraya has already diversified beyond the mobile sector, making the country one of the first markets to see the introduction of its recently-launch rural payphones and public call offices (PCOs). Thuraya claims to have sold around 1,200 PCOs since their launch last year, of which around 600 have been deployed in Iraq. “We introduced them in the latter part of last year and have had good feedback. We are now talking with several countries about introducing them on a much larger scale,” explains Omran. The countries where the operator plans to launch the solutions this year include Saudi Arabia, Sudan, Iran, Yemen and Pakistan. It is also planning to offer them as a crew-calling solution for oil and gas, and maritime firms. “Thuraya has started to promote the PCOs in Iraq. Afghanistan could also be a very good target, as well as remote areas in Saudi Arabia and North Africa. We can also provide the solutions on an offshore platform,” says Bocar Ba, deputy general manager at Intracom Middle East, which supplies the terminals to the operator. Also on the horizon, meanwhile, is a move into the aeronautical sector with the provision of e-mail, SMS, voice and data connectivity to passenger jets. A recently-formed venture with service provider, AirsatPhone, will initially focus on the corporate, leisure and business markets, followed by commercial and military aircraft, and helicopters. According to Thuraya, it has completed initial tests for its aeronautical system, and is now involved in field trials. The provider says its units will cost US$45,000, and expects that it will offer a flat rate of US$1.25 cents per minute for calls. On a more immediate scope, Thuraya will take a delivery of 100,000 handsets this month from supplier, Hughes Network Systems, having come close to its original quota of 250,000. It is also aiming to generate more traffic from value added services with the recent launch of pre-paid SIM cards and offers of 100 free SMS messages and 30 minutes free internet access. In 2005, the operator plans to diversify further into the arena of data services with the launch of its next generation of handsets, which will include colour screens and GPRS access. Thuraya also has various priorities to tackle this year on the financial front. The operator will reportedly start to pay off its US$400 million exposure to a consortium of banks in June. Although its audit has not been completed, Omran claims that the provider reached breakeven on the operational level by the end of last year, and had increased its monthly average revenues per user (ARPU) levels to between US$90 and US$100. And if things go according to plan this year, 2005 may see the operator cast its net wider. “We have some initial discussions going on about [covering] the Americas, North and South. But nothing can be announced — we are taking things step by step, rather than jumping and breaking our legs,” Omran adds.||**||

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