Thursday 28 Mar 2024
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KUALA LUMPUR: Homegrown satellite communications services company TS Global Network Sdn Bhd (TSGN) has embarked on satellite co-ownership via its venture with Hong Kong-based satellite operator APT Satellite Company Ltd (APT) to scale up its capacity and competitiveness.

APT, a wholly owned unit of APT Satellite Holdings Ltd that is listed on the Hong Kong Stock Exchange, currently operates four in-orbit satellites that cover Asia, Europe, Africa and Australia.

The collaboration will see TSGN investing in a designated payload (transponder capacity), known as TSGN MySAT-1, on APT’s APSTAR 9 satellite, which is to be launched in the fourth quarter of the year from a facility located in Xichang, Sichuan, China.

TSGN and APT jointly announced their collaboration at a news conference in Hong Kong last week. The total cost of investment in the venture is US$220 million (RM783.20 million).

“We are cognizant of the financial and regulatory hurdles and demands in pursuing a bold approach to ramping up our regional growth, and [thus] have adopted a red ocean strategy to map out our journey. This collaboration with APT is an illustration of our strategy,” TSGN group managing director T Dhrmarajah Dhashna told reporters then.

TSGN, however, declined to reveal its portion of investment in the venture on grounds that such a revelation could affect its competitiveness.

“We have budgeted up to RM250 million to invest in building capacity for our ground and space segments. Suffice to say, our investment in this collaboration is substantial,” said TSGN group chief executive officer Kent Ho.

Ho added the bulk of the satellite’s capacity will be used to meet requirements of TSGN’s existing clients.

“Our existing clients will account for 50% of the capacity of MySAT-1/APSTAR 9, while the rest will be used for new customer acquisition,” said Ho.

The privately-owned group expects the satellite payload to drive its growth and turn it into a leading regional player in delivering reliable, high speed and affordable satellite communications and solutions to a wide spectrum of government and commercial customers.

“Through the co-ownership model, our bandwidth is secured for 15 years. The only downside is it would also mean that we would have to bear the risks that come along with a 15-year commitment, as well as the high upfront capital expenditure for co-ownership,” he said.

“[But] with this purpose-built satellite and payload, we can offer high speed broadband in leveraging the satellite and our investments in our ground segment. Overall, we envisage offering broadband services that are cheaper by as much as 10% to 15%,” he said.

APT director and president Cheng Guanren said the company’s collaboration with TSGN came about because the latter has been a long time customer.

“The collaboration is also important for the strategic development of APT in the long run because it will further extend our market penetration and enhance our customer base in the region,” he added.

TSGN had in early March inked a deal with broadband satellite solutions and services provider Hughes Network Systems LLC to upgrade its C-band satellite network. Subsequently, it opened a RM100-million purpose-built facility in Cyberjaya, TSGI Cyberport, which caters to the latest satellite communications technology.

Going forward, Ho said TSGN may tap into the capital markets — like a public listing — to fund its expansion in the next five to seven years, or undertake mergers and acquisitions.

 

This article first appeared in The Edge Financial Daily, on May 18, 2015.

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