Intelsat, the former governmental co-operative which went private in November last year, today officially opened an office in Johannesburg in anticipation of its listing and the partial liberalisation of the local telecommunications market.
The company has operated in SA for decades as a provider of services to Telkom, but says the time is now right to move closer to its customers in an increasingly competitive satellite market. The promise of two more customers in SA next year also played a role.
Intelsat has 19 satellites in orbit and is launching the first of 10 satellites next week. It has also requested proposals for the purchase of four more satellites with the capability to provide global broadband Internet services. The three orbital satellites and a spare on the ground will operate in the Ku/Ka band, in a bent-pipe configuration.
All South African traffic via Intelsat has been channelled through Telkom under its monopoly, and Telkom owns 1.2% of the company. SA represents more than 2% of the global Intelsat revenue and one-third of the total African business, and sub-Saharan Africa is responsible for 8% of total income.
The company says its capacity for the African region is being put to full use, and it expects more growth with the additional 45% capacity it is to add to its network.
Conny Kullman, CEO of the global organisation, says the pressure from competitors is one of the reasons necessitating a local presence.
"We want to be where the customers are. Fifteen years ago, when Intelsat was the only game in town, that wasn`t as important. But it is now."
The company also believes in moving in on markets before telecommunications regulation is liberalised, as such markets generally show strong growth. Government`s current policy is to allow two additions to the current Telkom international gateway licence in the form of a second national operator and a gateway to be operated by parastatal Sentech.
On the Internet side of its business, UUNet and Internet Solutions, through Telkom, are Intelsat`s biggest SA clients. Although the company does not intend to start offering retail services with its privatisation, future plans bring hope of broadband to homes via local operators during 2005.
Kullman says the first broadband satellite, due to be launched in late 2003, will probably be used over either Latin America or Asia, but by late 2005 a satellite will cover Europe and Africa. Considering that sub-Saharan Africa is one of the fastest growing regions for the company, SA can expect capacity to be dedicated to it.
Africa may also see a general price reduction with the privatisation of Intelsat.
"Today an African customer pays the same price as a European customers, the same as an American customer," says Kullman. But the move away from fixed price lists and toward market-based pricing will "recognise regional circumstances".
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