Satcom solutions provider Global Invacom poised for next wave

• Digital channel stacking to change the satellite TV game
• Spectrum tug-of-war between satellite operators and mobile telcos

SINGAPORE-based satellite communications solutions provider Global Invacom is in a unique position in its industry, not just as a provider of ground equipment, but also by having chosen to headquarter itself in a country that bans private ownership of satellite dishes.
 
It is an irony not lost on its executive chairman Tony Taylor, who remarked that “sometimes we wonder how we managed to do this.”
 
“We didn’t know that satellites were not allowed in Singapore when we decided to list here,” Taylor told Digital News Asia (DNA) in Singapore.
 
“Having said that, we like the environment here – there is a very ‘can-do’ attitude in Singapore, in terms of business and getting things done,” he added.
 
Global Invacom listed on the Singapore Exchange (SGX) after a reverse takeover of the Radiance Group in 2011. Post-listing, Global Invacom has been busy acquiring companies, with the latest being Skyware Global, a US-based manufacturer of satellite terminals, for US$11.6 million.
 
Ready for the next phase
 
The satellite industry is growing, with a 3% increase in revenue in 2013, according to a Satellite Industry Association report. The bulk of revenue came from the television segment, which accounted for US$92.6 billion out of the total US$118.6 billion.
 
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This segment is poised for a technological advance, according to Taylor, and this will come from “digital channel stacking, which allows 32 continuous video streams from a single low noise blocker (LNB).”
 
“You can now record more multiple channels at the same time, and stream from server satellites to client-type boxes,” he added.
 
An LNB refers to the receiving device mounted on satellite dishes that are used to decode and amplify the signal to the set-top box.
 
According to Taylor, broadcasters are driving this shift, as it gives them more flexibility in reaching customers.
 
“Everybody wants it, and that’s one of the biggest problems we have now,” he said.
 
“For the first time in our history, we are concurrently developing four different LNBs and three different types of switchers for three broadcasters,” he added, without giving details.

That is a challenge as Global Invacom has to boost its research and development resources while the industry is “running down old stocks,” Taylor (pic above) claimed.
 
“You see your revenue falling and your expenditure increasing,” he said.
 
“The good news is that the industry has a 10-year cycle – as long as you’re in the next generation, you are guaranteed business for the next 10 years.
 
“What’s crucially important is not to miss this change,” he added.
 
More advanced countries would want to upgrade to give their customers a ‘stickier’ value proposition.
 
Global Invacom has a large customer in Malaysia looking to implement digital channel stacking rapidly, according to Taylor.
 
But broadcasters would need to have the appetite to take on the cost of upgrading their equipment to receive these upgrades. He believes that premium customers will likely get these new features first, then the middle tier, before the entire satellite TV receives the upgrade in two to three years.
 
The availability of this feature has led to interesting conversations with customers, according to Taylor.
 
“Customers want digital channel stacking now, even though their set-top boxes are not ready for it,” Taylor said.
 
“I’m looking forward to keeping up with demand in 2016, which is a good problem to have,” he added.
 
Mobile guys grabbing spectrum
 
Spectrum needs is an on-going fight between telcos and regulators, but little is said about the one between telcos and satellite communications.
 
On a worldwide basis, the UN’s International Telecommunication Union (ITU) allocates radio spectrum and satellite orbits.
 
“This year when the ITU meets, there is a good chance that it will steal more bandwidth from the satellite guys to give to the mobile telecom guys,” Taylor said.
 
“The demand for mobile phones seems unending, and we are using more and more bandwidth, and it seems likely more of the spectrum will be handed over,” he lamented.
 
Industry challenges

Global Invacom’s acquisition of Skyware Global is therefore key, as the US company had begun working in the ‘Ku band,’ the next band after the ‘Ka band’ according to Taylor.
 
The Ku (Kurtz-under) band) is used mainly for satellite communications, especially satellite television. The Ka band is apparently more susceptible to weather interference.
 
Demonstration models of dishes and LNBs that work on the Ku band have already been developed and would be key for surviving the spectrum tug-of-war, according to Taylor.
 
Beyond spectrum, the other big worry for Taylor is whether there is enough space – yes, as in space up there – to put up enough satellites for everyone.
 
“It’s about control of geostationary slots – despite discussions about LEO (low-Earth orbit), that’s stuff you need to track,” he said. “You need more expensive ground terminals to track satellites as they move.”
 
“What people want is low-cost ground equipment and geo-stationary satellites, but I’m afraid what might emerge is that people would go out of their way to control slots as a ransom or a blocking tactic,” he added.
 
An organisational body needs to take responsibility to ensure that geostationary slots are available for countries to access, and to prevent deep-pocketed individuals or organisations from hogging a slot, Taylor argued.
 
Relationship and tech: It’s complicated
 
The satellite industry is maturing, with individual owners which lack exit plans, according to Taylor.
 
“The real challenge for us is to identify the customer, broadcaster relationships, technology or geographies that we need, and acquire the businesses to build a strong global business,” Taylor said.
 
“We have a good record on acquisitions and people tend to check with us to see we are interested – making the right acquisition at the right place at the right time while being able to raise the money for it,” he added.
 
Broadcaster relationships are tricky, as they tend to stick to a vendor that they trust, according to Taylor. It’s much easier to buy the business by buying the competitor.
 
Local relevance and recognition are also important, with Taylor highlighting that businesses look to companies which can assemble equipment and provide support locally.
 
All this, while remaining on top of the technology that Global Invacom would need to remain competitive.
 
“Skyware Global is actually a good example that ticks all the boxes of relationships, local relevance, as well a technology we’ll need,” Taylor said.
 
Asian shift

Global Invacom had a challenging time for its first half of fiscal 2015 that ended on June 30, with revenue declining 22.7% to US$54 million from US$69.8 million in the same period the year before.
 
It attributed this revenue decline largely to delayed sales to three major customers through destocking or changes in procurement procedures. Most of the delayed orders have resumed, so it is expecting a better second half.
 
Asia traditionally does not contribute a substantial amount to Global Invacom’s global revenue, with just 11% in the first half of 2015, compared with the 55% from America and 31% from Europe.
 
However, this is set to change as the acquisition of Skyware Global opens new markets for the company, which traditionally only had Malaysia in Asia, according to Taylor.
 
“With Skyware Global we got some sales in Indonesia and Thailand, as well as [the ability to] accelerate sales in the region,” he said.
 
“South America is the other target market we would be concentrating on for the next year,” he added.
 
South America might take longer due to the dependence of oil prices in the economies in that region, he however cautioned.
 
“We are going to grow substantially in the next three to five years, with a good portion coming from Asia,” Taylor said.
 
“While the drop in the ringgit is painful for me in terms of revenue and bottom-line, it opens up other opportunities for Global Invacom,” he added, but declining to elaborate.
 
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