All systems go

With the launch of Thuraya's third satellite scheduled for early this year, CEO Yousuf Abdulla Al Sayed tells Roger Field about plans for expansion in the lucrative east Asian mobile satellite services market.

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By  Roger Field Published  January 1, 2008

When Yousuf Abdulla Al Sayed discusses the weather, it is usually more than just small talk. As CEO of Thuraya Satellite Telecommunications Company, Al Sayed is aware that even slight changes to wind speeds or currents in the Pacific Ocean have the potential to cause his company costly delays.

It is something that has caused headaches for the Abu-Dhabi satellite company in recent months, with rough weather near Hawaii delaying the launch of Thuraya's third satellite, Thuraya-3, a number of times since mid-2007. And these delays have, in turn, caused setbacks to the company's plans to move into the potentially lucrative Asian satellite communications market.

The expansion into Asia, which is planned this year, is a major strategic move for Thuraya, as it will double our coverage area with minimal impact to our operating costs.

Despite this, Al Sayed, who has been at the company's helm since its inception back in 1997, takes a remarkably relaxed approach to what he sees as an inevitable part of the fast growing satellite communications business. "We were praying most of the time," Al Sayed jokes when asked how he and his colleagues have coped with the pressure of the past six months.

But Al Sayed's prayers look set to be answered this month, with Thuraya having confirmed the start of the new-year as the expected launch date for Thuraya-3. The project underpins

Thuraya's plans for the next few years, and is also central to its expansion strategy.

"We are working on two areas," Al Sayed says. "We are improving our products and services, and also expanding our markets while focusing on existing markets to maintain them and remain the leader in them.

"We know we have at least 50% of the voice market within our coverage area, and I am not sure what the percentage is globally, but it is at least 50% if not 60%, so we are really fighting to develop this and grow it.

Thuraya, which provides roaming mobile services via its satellite network, and through agreements with GSM operators, has a coverage area encompassing more than 150 countries in the Middle East and North Africa, central Asia, the Indian subcontinent and Europe.

Following the launch of Thuraya-3, the company intends to move into eastern Asia, a region that will more than double its coverage area. As one of the world's most densely populated region's, east Asia is also likely to become a particularly lucrative area for Thuraya.

"The expansion into Asia, which is planned next year, is a major strategic move for Thuraya, as it will double our coverage area with minimal impact to our operating costs," Al Sayed says.

"We will be using the existing set up we have, with some offices in Asia to support our operation there. The technology is the same and we are going to repeat the successful technologies and develop new ones," he adds. "We think Asia Pacific is a promising market.

Thuraya is already in talks with potential partners in Asia, which it hopes will lead to tie-ups in the region that will allow it to launch its full complement of services, as well as some new services for sectors including maritime.

"In China, we have signed a couple of agreements and currently we are in the implementation stage," Al Sayed says. "We are also working in other countries such as Australia. We have an agreement in Korea and we are active also in Indonesia, the Philippines and Malaysia.

Despite this, Al Sayed admits that launching a satellite is an expensive, long-term investment, with the cost of building and launching a satellite likely to exceed US$300 million. "It could be a slow pick up, as is usual in the satellite business," Al Sayed says. "In remote areas, it takes time to promote

yourself, and it is very costly and difficult to reach these markets," he says.

Al Sayed adds that for satellite operators such as Thuraya to ensure a sound financial return from a satellite launch, it is necessary to gain about 100,000 subscribers. "When you hit 100,000 you have achieved something," he says.

However, Al Sayed adds that in the satellite industry, it would be normal to hit only 30% of total expected subscribers in the first year. "If you are successful and people like your service, then it starts to taper up and eventually you are talking about 100,000 and 200,000," he says.

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