Satellite operator SES looks to set up India arm; costs for DTH players may fall

The European firm's entry is expected to bring costs down for domestic direct-to-home (DTH) TV players, who have to lease satellite bandwidth through the Indian Space Research Organisation (Isro).    

The license, being processed by the Indian National Space Promotion and Authorization Centre (In-Space), will allow the firm to offer satellite capacity directly to its DTH and very small aperture terminal (VSAT) satellite broadcasting clients, including Bharti Airtel Ltd and satellite bandwidth service provider Hughes Communications India.

"At present, Isro would lease our satellite bandwidth through its commercial arm, NewSpace India Ltd (NSIL), which used to then offer the capacity to clients via one-year contracts. This gave us less room for commercial independence, which will now change," said the executive.

NSIL offers the satellite capacity at a 5% markup, according to industry stakeholders. 

The DTH market 

India’s direct-to-home (DTH) satellite TV market saw its four top service providers—Airtel, Dish TV, Sun Direct and Tata Play—clock $1.33 billion in revenue in 2022-23, according to company filings with the Registrar of Companies as of December 2023. The 2023-24 industry figures are yet to be disclosed.

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However, the market is shrinking. The number of paid DTH subscribers fell by 3.1 million to 63.5 million in 2023, showed data published by the Indian telecom regulator, Telecom Regulatory Authority of India, on 23 April. The 2023-24 revenue, as a result, is expected to see a decline. 

Nevertheless, industry stakeholders believe the market is strong and SES's entry is likely to rationalize satellite bandwidth leasing costs.  

Prashant Kumar Singhal, emerging markets leader for tech, media and telecom at consultancy firm EY Global, said that while a full 20% rationalization may not play out, there will still be some cost reduction that can bring down the cost of satellite bandwidth for DTH and VSAT companies.

“The cost can reduce marginally. NSIL’s commission is 6-10%. Now, entities have to set up Indian entities to do business, so there will be also some cost of compliance. This is primarily an ease of business exercise, since multinationals generally invest more when they are in full control—and can expand more in India," Singhal added.

Shivaji Chatterjee, president and managing director of Hughes Communications India, said the company’s entry will remove multiple costs—especially NSIL's 5% markup—from the equation and have a “two-fold cost reduction" on satellite bandwidth. “In addition to the 5% markup, there is a withholding tax of 11% that NSIL charges to clients for making payments in foreign currencies and other miscellaneous factors. It will also go away as Indian entities will offer billing in the Indian Rupee. Finally, we will also have direct commercial negotiating capability with satellite operators," Chatterjee said.

Better services for customers 

While this could cut satellite bandwidth leasing costs by nearly 20%, most industry stakeholders say it is too early to determine if the same would pass down to consumers. A senior executive at one of India’s top DTH firms said on the condition of anonymity that instead of a direct shift in the cost of DTH transmissions, “there could be more immersive and interactive satellite broadcast services that generate value-added revenue for service providers".

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“Things such as true 4K transmissions of on-demand video content to TV could finally take place at much lower prices than what they are now. This would be the real fillip of lower satellite costs, and we definitely expect that to happen in the coming months itself," the executive added.

SES, which is publicly listed in France and Luxembourg, reported net annual revenue of $2.21 billion as of 31 December. The company follows a January to December financial cycle. On 30 April, SES announced a $3.1 billion acquisition of fellow satellite operator Intelsat, which is awaiting regulatory approvals. Once cleared, SES and Intelsat will jointly become one of the world’s largest satellite operators.

The executive cited above did not reveal SES’ current or expected revenue from India.

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“India is a crucial market because of the sheer size of its user base. Video consumption and on-demand video broadcasting will only grow—this leaves us perfectly placed to offer consumption aboard our middle-earth orbit (MEO) constellation and the five geostationary satellites that we have above India," the executive said.

An email sent to Suzanne Ong, SES’ vice-president of external communications, regarding the company’s India expansion plans did not receive any response. When contacted, Pawan Kumar Goenka, the chairman of In-Space, declined to comment on the matter.

Jio Platforms and SES formed a joint venture, Jio Space Technology Ltd, for the former's satellite-based broadband services, JioSpaceFiber, in 2022.