WASHINGTON — Eutelsat’s introduction of satellite broadband across Africa faced a string of deployment issues, including a government shutting off internet access during an election, wiping out revenue expectations from that new business line for the year.
Eutelsat executives said the challenges getting Konnect Africa off the ground since 2016 are now largely in the rearview, but have nonetheless pushed any material revenue from the growth initiative out to the company’s next fiscal year.
Konnect Africa started service in late 2018 using leased capacity on Emirati operator Yahsat’s Al Yah 3 satellite, and was live in 19 countries as of February. But a combination of logistical challenges getting equipment in place, delays obtaining regulatory access in the Ivory Coast, and, in the Democratic Republic of the Congo, a shutoff of the internet during elections in December, hobbled service ramp up, Eutelsat Deputy CEO Michel Azibert said May 14.
Azibert said Paris-based Eutelsat expects “no material revenues” from Konnect Africa this year as a consequence of those challenges. Eutelsat’s confidence in delivering satellite broadband across sub-Saharan Africa remains unshaken, he said.
Eutelsat CEO Rodolphe Belmer said the company expects significant revenues from Konnect Africa during its next fiscal year, which begins in July.
Belmer said Eutelsat was surprised by the difficulty kick-starting Konnect Africa, but that using leased capacity is allowing the company to resolve those challenges before its own satellite, called Konnect, launches in December.
“The very purpose of that ramp-up period was exactly to make sure that when our big satellite is operational, when it’s online, we are ready with our commercial networks up and running and with all the executional difficulties behind us,” he said.
Arianespace is under contract to launch the satellite on an Ariane 5 rocket. Belmer said the satellite will enter service in the summer of 2020 following its launch from French Guiana.
Lower revenue forecast
The absence of Konnect Africa revenues weighed on Eutelsat’s total revenue, forcing a revision of the company’s full-year forecast from “broadly stable” to a 3 percent reduction for its core business. The lower forecast is in line with the three percent revenue drop it recorded for the nine months ended March 31, taking in 985 million euros ($1.104 billion) across its five operating verticals — video applications, government services, fixed data, fixed broadband, and mobile connectivity.
Belmer said Eutelsat still anticipates returning to “slight growth” in its next fiscal year despite the setback. Eutelsat has three satellites launching this year that will have new expansion capacity — Eutelsat-7C, Eutelsat Quantum, and Konnect — that Belmer said provide room for growth.
Eutelsat also has a replacement satellite, Eutelsat 5 West B, launching this summer to continue broadcast services in place of the 17-year-old Eutelsat 5 West A satellite.
Belmer said Eutelsat sees strong untapped demand for broadband connectivity, and continues to view large, geostationary high-throughput satellites as the best way to reach many of those potential customers. Operators of constellations in low and medium Earth orbits will struggle with expensive user terminals when trying to connect households and price-sensitive consumers, he said, while Eutelsat will not.
Belmer affirmed Eutelsat’s intention to launch a low-Earth-orbit constellation focused on connecting sensors and other low-data-rate Internet of Things (IoT) devices. A first satellite Eutelsat ordered from Irvine, California-based Tyvak International launches this year, he said, and a “first small batch of commercial satellites will follow shortly after.”
The cost of building and launching each IoT satellite is around 1 million euros, meaning a constellation of a few dozen satellites would be very affordable, he said. Eutelsat has not stated how many satellites it will have in the constellation.
C-band timeline gets foggy
Belmer said the U.S. Federal Communications Commission’s May 3 request for more input on repurposing C-band spectrum commonly used for satellite broadcasting came as a surprise, and makes the process more complex.
“We didn’t believe that at this time of the process, when everyone was expecting the executive order to be released by the end of June, [that] the FCC would come in with the public notice, which means with a new inquiry and asking new questions,” he said.
To Eutelsat, the public notice is an indication that the FCC is weighing more heavily the concerns of satellite operators outside the C-Band Alliance, as well as the concerns of network operators with C-band satellite dishes.
Members of the C-Band Alliance — Intelsat, SES, Eutelsat and Telesat — have proposed selling 200 megahertz of spectrum to cellular operators to use for 5G networks. Three smaller operators — ABS, Hispasat and Star One — that have partial C-band coverage in the U.S., also want a portion of any proceeds, as do operators of C-band dishes.
Belmer said he no longer expects an FCC decision in June. Pressure is increasing on the FCC to make a decision, however.
On May 10, U.S. Sen. Roger Wicker (R-Miss.) and Sen. John Thune (R-S.D.), sent a letter to FCC Chairman Ajit Pai urging the commission “to act quickly to make spectrum in the 3.7 GHz to 4.2 GHz band available for 5G.” Satellite operators use those 500 megahertz of C-band spectrum to beam television channels and other content to customers in the United States.