Royal Group yesterday announced plans to launch Cambodia’s first satellite into space in early 2013, an investment worth between $250 million to $400 million, CEO Kith Meng said after signing a satellite concession license with the government.
The satellite, to be launched by Royal Group’s new subsidiary Royal Blue Skies, would provide a series of services including multimedia operations like television and broadband Internet and it would reach Thailand, Laos, Vietnam, Malaysia and Singapore, he said. The government and private companies currently lease capacity from exiting operators.
“We plan to launch 2013, the first quarter, as per schedule…. This has been studied since 1997, but ever since, the market has not been ready yet,” he said, adding that he expected the initial rate of return to be negative.
Royal Group, which owns the mobile telephone service provider MobiTel, has secured bank financing for the deal and is still developing its plans, he said.
The company has not chosen a satellite manufacturer or determined the physical location for the satellite’s launch into space, he said, but added that a second satellite could be launched by as early as 2015.
He said he did not expect any other Cambodian company to emerge as a competitor, given that Thailand, which has a far larger population, has only one satellite company, Thaicom.
“Another operator just wouldn’t be possible, because the market won’t be there,” he said.
So Khun, Minister of Posts and Telecommunications, said on the sidelines of the signing that the government had approved the deal in February and that his ministry did not plan to issue any more licenses for satellite operators.
The government did not initiate a bidding process for the concession and Royal Blue Skies will share some of its revenue with the government, but the amount has not been determined, he said.
“The Blue Sky will pay the government, share revenue and everything,” he said, adding that the details will be determined by the Finance Ministry. “We have more time to discuss.”
He told the audience at the signing that Prime Minister Hun Sen approved the license to help Cambodia compete regionally in telecommunications.
“We have caught up with other countries in the field of information technology, but we lack a satellite,” he said. “Samdech has considered and permitted the ministry to find every means to create a satellite like neighboring countries, even though some of them don’t have it.”
Telecom analysts in the region said a new satellite service provider would need to focus on pay TV as its main avenue of growth and profit.
And while there is definitely untapped demand for that in Southeast Asia, a new company will face steep price competition with established players, and need to offer something different like new channels or other packages, said Jayesh Easwaramony, director of telecommunications practice for Frost & Sullivan’s Asia-Pacific region consultancy firm.
“The only way to fully use the capacity is if they have a unique footprint,” he said. He said most other uses would face far less demand, like broadband Internet service, which could take up to 10 percent of capacity.
James Sullivan, head of Asia telecom research at JP Morgan Chase & Co, said a new satellite service provider would need to focus on the most lucrative activities, particularly given the high capital cost of equipment.
“It really comes down to the business plan. It would need to be a relatively targeted business of broadband or pay for TV rather than telephony services,” he said.
(Additional reporting by Hul Reaksmey)