Satellite Recovery Stalled By Telecom
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The satellite industry barely grew last year and its anticipated recovery has been stalled by the weak economy and telecom downturn, according to a new study by the Satellite Industry Association and Betheda, Md.-based consulting firm Futron Corp.
At the same time, the satellite industry "is growing its top-line revenue well, compared to the rest of telecom," said Richard DalBello, executive director of the Satellite Industry Association.
The annual Satellite Industry Indicators Survey is conducted by Futron for the SIA. Futron not only surveys companies, but also culls through publicly available data to provide an overall industry picture.
Much of the information in the report was gathered before the recent wave of accounting scandals and sagging stock market prices, SIA and Futron officials stressed.
As result, the report is more bullish for the satellite industry than would be expected, predicting that revenues would grow as much as 19 percent this year to reach $101 billion, compared to $85.1 billion last year.
Revenue growth for the industry increasingly is being driven by the satellite services sector, DalBello said.
Fueled by satellite TV, the satellite services segment grew 18 percent in 2001 and tripled in size from 1996 to 2002, according to the survey. Revenues from satellite services also were helped by modest growth in satellite radio and broadband services, DalBello said.
Satellite services generated $46.4 billion in revenue, including $7.2 billion from transponder leasing by satellite operators and $39.2 billion from subscription satellite services, the survey found.
Despite the success of satellite services, other sectors examined by the study were less promising. Two of those segments, manufacturing and launch services, contracted in 2001.
Reduced satellite orders caused worldwide manufacturing revenues to fall by 18 percent in 2001, according to the report. U.S. manufacturers took the brunt of that weakening by absorbing a 38 percent plunge in revenues, the findings showed.
The worldwide launch industry was beset by an even larger decline of 41 percent during 2001, the Futron researchers found. The worst damage once again was inflicted on the United States, where launch service revenues plummeted 48 percent last year.
A number of factors caused the deep declines in manufacturing and launch revenues, according to Futron. They included the increased competitiveness of foreign suppliers, the fluctuation of international exchange rates, and a continued global perception that U.S. satellite export control laws are a barrier to commerce, DalBello said.
On an encouraging note, the demand for replacement satellites and the introduction of new satellite services should result in a significant recovery in manufacturing and launch revenues during 2002 and 2003, DalBello added.
The ground equipment sector grew nearly 11 percent last year, aided by end-user equipment sales that corresponded to the gains in satellite services, said Elaine Gresham, a program manager in Futron's space and telecommunications division.
At the same time, manufacturing revenues in other sectors fell last year. Revenue paid to prime contractors slipped to $9.5 billion in 2001, compared to $11.5 billion in 2000, the survey found. Total revenue, including payments to subcontractors, dipped to $14.1 billion in 2001, down from $17.2 billion in 2000.
Those figures are expected to rise this year above the 2000 levels, the survey found. Total prime contractor revenue is slated to reach $11.8 billion this year, while total revenue, including subcontractor payments, is projected to hit $17.6 billion.
Total launch revenues, including subcontractor payments, fell to $3 billion for 2001, after reaching $5.3 billion in 2000, according to the survey. Prime contractor launch revenues for 2001 also dropped, sliding to $3 billion in 2001, compared to $5.3 billion in 2000.
The outlook is expected to brighten considerably in 2002, when total launch revenues are projected to hit $9.4 billion and prime contractor launch revenues are slated to reach $5.5 billion, according to the survey.
Since satellite manufacturing and launch services represent "new plant and equipment" for the industry, they are the first sectors to absorb the impact of slowed growth and overcapacity, Gresham said.
In the ground equipment segment, revenues have been climbing fairly consistently each year since the annual study began in 1996. Ground equipment revenues totaled $19.6 billion in 2001, compared with $17.7 billion for the previous year. For this year, ground equipment revenues are projected to total $21.8 billion, Futron concluded.
--Paul Dykewicz
(Richard DalBello, Satellite Industry Association, 703/739-8357; Elaine Gresham, Futron Corp., 301/347-3411)
This article first appeared in PBI Media's Satellite News |
