Both Hong Kong listed satellite operators had annual general meetings this week. Both claimed that a dramatic increase in Asian satellite capacity does not augur a profit squeeze. Both have some convincing to do.
Asia Satellite Telecommunications Holdings (AsiaSat) and APT Satellite face sceptical investors who see Asian skies becoming horribly crowded. Analysts are bearish on the industry. Excess transponder capacity could hit 19 per cent within two years, Deutsche Morgan Grenfell predicts.
New launches, increased players and the impact of digital compression technology, allowing more signals on the same bandwidth, means transponder lease prices are predicted to fall.
AsiaSat, in particular, has been arguing against this theory. Decaying older satellites mean over-capacity is over-egged. Similarly, the idea that satellite operators are nothing more than an interchangeable commodity is untrue. Not all operators are created equal, and the market remains highly differentiated for specific uses, such as telephony and television broadcasting, it says.
APT has worries with its forthcoming launch of its third satellite on the troubled Chinese Long March rocket. Should the launch on the 3B rocket have trouble, the firm will look for another launcher, incurring costly delays. By contrast, AsiaSat faces a third launch on the more reliable Russian Proton system. Whatever the supply picture, a successful launch will put the share prices of the two companies into a new trajectory.