Northern Sky Research

$$$ Per Transponder

Feb 28th, 2012

NSR recently released the industry’s first systematic assessment of key financial metrics for FSS satellite operators. This new study, Satellite Operator Financial Analysis, analyzed a wide range of metrics including overall revenues, cash flows, capital expenditure requirements, debt levels, and return on satellite investments. Beyond a detailed assessment of the top publicly reporting FSS operators, this study also ranked operator’s by each metric based on their 2010 score as well as undertook a statistical analysis of the main qualitative financial metrics in order to establish benchmarks for the industry in terms of general, average values for these metrics as well as the typical distribution of the metric values.

One particularly pertinent metric for FSS operators is average annual revenues per leased transponder, which was determined by dividing an operator’s total annual revenues by its number of leased transponders as of the end of its fiscal year. While this should not be treated literally as transponder pricing because FSS operators often obtain revenues from other sources besides capacity leasing, the average annual revenues per leased transponder still provides considerable insight into trends among operators and by region..

As a whole, the FSS industry tends to average US$2.1 million per year in revenues per leased transponder. More telling, though, was that there was a very large standard deviation associated with average annual revenues per leased transponder of about US$1.5 million. This was primarily driven by a small number of operators who could generate well in excess of this mean value in terms of average revenues per leased transponder. Conversely, the median value for average annual revenues per leased transponder actually fell under the average at US$1.7 million. This indicates that the majority of operators actually earned less than the average.

This last point is best illustrated by assessing this metric based on where each FSS operator obtains the majority of its revenues. For FSS operators dominant in Western Europe, they typically averaged nearly US$2.8 million per year from each leased transponder, while those with most revenues coming from the Americas actually averaged the least per leased transponder at just under US$1.8 million. For FSS operators seeing most of their revenues coming from Asia, they actually came in just above the Americas averaging just over US$1.8 million per year from each leased transponder. However, the variability in average revenues per leased transponder in Asia was more than twice that of the Americas indicating that parts of Asia were much more lucrative than the Americas (e.g. Japan), while other parts of Asia were much less so. This trend is illustrated by the fact that the median value of annual revenues per leased transponder in the Americas was higher than in Asia. For FSS operators deriving most of their revenues from Central & Eastern Europe, the Middle East and Africa, these players averaged nearly US$2.2 million per year from each leased transponder, but again the range of values was nearly as large as Asia indicating substantial variability in pricing in this region.

Bottom Line

Average annual revenues per leased transponder, even if not exactly corresponding to average transponder prices, is nonetheless a very useful industry benchmark for the FSS sector. On one side, it allows easy comparison to be drawn between individual operators as well as illustrating different regional trends. From the other point of view, this benchmark, which is statistically derived from more than 150 data points, allows for quick revenue estimates for business planning either on a per satellite basis or for estimating revenue generation potential for individual operators.