NSR’s Global Satellite Capacity Supply and Demand, 17th Edition report, released today, finds COVID-19 having a deep, near term impact on key satellite capacity growth areas, but the industry will bounce back to 2019 revenue levels in 3 years. Despite near term challenges, NSR is still bullish on long-term potential, forecasting Satcom revenues reaching $26.5 Billion by 2029. Backhaul, Consumer Broadband, Gov/Mil, and some Maritime segments, show high levels of resiliency against COVID-19, albeit new installs have been impacted by supply chain issues and lockdowns. On the other hand, Aero and Cruise have seen their growth trajectory truncated, but they have not lost their long-term potential. Video revenues will continue to degrade, although the potential to generate a continued and predictable Video-based cash flow cannot be ignored.
"Market addressability in backhaul, digital divide, and broadband has increased exponentially, 3-10x times with new CAPEX efficiencies” notes Gagan Agrawal, NSR Senior Analyst and report co-author. “In addition, oversupply in select regions will lead to operators discounting pricing to reach desirable fill rates, thus pushing Satcom to a wider mass market. Business Aviation, Merchant Shipping, and Gov/Mil are poised to maximize revenue per bit, even as multi-orbit capacity architectures are implemented in high traffic hotspots by operators and service providers alike. C-band repurposing in many regions is also poised to reduce reliance on FSS for network applications, while giving cash to select operators to boost financial health.”
“The demise of FSS supply has already started, and it will only stay relevant in Video markets, especially after the emergence of flexible HTS,” states Lluc Palerm, NSR Senior Analyst and report co-author. “Operators are pursuing diverse supply strategies depending on their risk appetite and target markets: VHTS, Hybrid payloads, incremental HTS, flexible payloads, Small GEOs or NGSOs represent this diversity. But with wholesale capacity commoditizing, operators need to take more responsibility across the value chain and expand their focus from Satellites to Networks. The industry must also not underestimate the transformative power of 5G. Not only will it open new use cases with easier integration with terrestrial technologies, but it will disrupt how the different stages of the value chain relate to each other with automated and standardized service orchestration.”
The recent spree of bankruptcies and exits rattled investors, but Satcom has tremendous potential to generate value and growth. Capturing a portion of this growth will require healthy balance sheets and readiness to invest in new infrastructure (HTS, Ground Segment), technologies (cloud, 5G, SD-WAN, Flat Panel Antennas), and business models (managed services, customer-facing sales channels, co-investment with MNOs). COVID-19 might also trigger much needed M&As across the industry.
