By Blaine Curcio

Hong Kong is one of the world’s truly global cities. Long an entrepot focusing on trade, starting in the 1970s and 1980s, Hong Kong became a center for regional broadcast, and in the 1990s, a center for satellite communications. Indeed, this city of under 8 million people is home to no less than 3 satellite operators (arguably 4), as well as the largest satellite service provider in the world (ABS, APT Satellite, AsiaSat, and arguably GapSat, and SpeedCast, respectively). Although many of the broadcasters have left Hong Kong for places such as Singapore, the satellite operators remain, and while they are putting less emphasis on the small, terrestrially-connected Hong Kong market, they are beginning to evolve in a satellite market that increasingly demands rapid evolution. The most recent example of this was the July 2019 announcement by AsiaSat that the company sought to take itself private, taking itself off the Hong Kong stock exchange. The company’s privatization would be but the latest change in the constantly-evolving Hong Kong satellite market.

Hong Kong is one of the world’s truly global cities. Long an entrepot focusing on trade, starting in the 1970s and 1980s, Hong Kong became a center for regional broadcast, and in the 1990s, a center for satellite communications. Indeed, this city of under 8 million people is home to no less than 3 satellite operators (arguably 4), as well as the largest satellite service provider in the world (ABS, APT Satellite, AsiaSat, and arguably GapSat, and SpeedCast, respectively). Although many of the broadcasters have left Hong Kong for places such as Singapore, the satellite operators remain, and while they are putting less emphasis on the small, terrestrially-connected Hong Kong market, they are beginning to evolve in a satellite market that increasingly demands rapid evolution. The most recent example of this was the July 2019 announcement by AsiaSat that the company sought to take itself private, taking itself off the Hong Kong stock exchange. The company’s privatization would be but the latest change in the constantly-evolving Hong Kong satellite market.

AsiaSat

The early 1990s were heady days in Hong Kong. The beginning of the end of British rule, and the beginning of international satellite broadcast from the fragrant harbor. In April 1990, a refurbished Hughes satellite was launched as AsiaSat-1 from Xichang Satellite Launch Center in Sichuan province, China. The story of the satellite is an incredibly improbable one, with AsiaSat-1 having originally been called Westar-6, and having been sent to low earth orbit mistakenly, before being retrieved by astronauts on their way down to earth months later. After being refurbished, the satellite was re-branded as AsiaSat-1 and launched onboard a Long March-3. 

As Asia’s first private satellite operator, AsiaSat had received investment from Mainland China’s CITIC, Hong Kong’s Hutchinson Whampoa, and the UK’s Cable & Wireless. Starting at the end of 1990, the Hong Kong government granted a broadcast license to HutchVision, the broadcasting arm of Hutchinson Whampoa, to broadcast 5 channels via AsiaSat-1 to the rest of Asia. Over the next several years, HutchVision’s Star TV attracted tens of millions of viewers across Asia, but failed to turn a profit. This led to the eventual acquisition by News Corp., part of the Rupert Murdoch empire. Despite the acquisition of Star TV, AsiaSat continued to live on, and remains a publicly traded satellite operator in Hong Kong (for now).

Having seen revenues peak at around US$250 million in 2012, AsiaSat has since seen revenues decline to around US$165 million due to a fall in satellite capacity pricing, and an organizational aversion to high throughput satellite (HTS) capacity, which is in many ways better suited for a period of prolonged low capacity pricing. The company remains well-capitalized, however, and revenues have broadly stabilized. The company is one of the few satellite operators that has not yet ordered a HTS, a move that is likely to come at some point in the future.

APT Satellite

APT Satellite was the second satellite operator to be established in Hong Kong, being founded in 1992 by a conglomerate of Mainland Chinese companies including China Telecom and the China Aerospace Corporation, precursor to CASC. APT Satellite has grown into a regional satellite operator, with capacity sales from Africa to China and top-line revenues of around US$150 million per year. 

APT Satellite has historically been considered the “most Chinese” of the three satellite operators in Hong Kong, this coming from its largest single shareholder being China Satcom. Moving forward, this will likely accelerate, with the company having established a joint-venture subsidiary in Shenzhen (over the border from Hong Kong) in 2016; APT Mobile Satcom Shenzhen. This company is expected to target in-flight connectivity sales, presumably to Chinese airlines, at least initially.

On the whole, APT Satellite is arguably the most financially consistent and healthy (with zero debt as of 2019) satellite operator in Hong Kong. While continuing to pivot increasingly towards China in terms of investment and future business plans, the company remains firmly rooted in Hong Kong.

Asia Broadcast Satellite

Asia Broadcast Satellite (ABS) was founded in Hong Kong in 2006. The company is known for its disruptive nature in the satellite market, oftentimes leading a price war in a downward trajectory. With that being said, ABS has succeeded in growing from a single satellite in 2006 to six satellites currently, providing coverage of more than 90% of the earth’s population.

With that being said, the company has not been without its share of challenges. Having been bought by private equity firm Permira Funds in 2010, ABS has been unofficially for sale for a number of years, with the investment period of 9 years and running being significantly longer than what might have been expected. The two co-founders have both long since left the company, and the new management team, while full of longtime industry executives, is primarily located on the Eastern Coast of the United States. Combined with an HQ office “rightsizing”, ABS may or may not continue to succeed as a satellite operator, but its presence in Hong Kong unquestionably continues to diminish.

Other Satellite Companies

In addition to the above three satellite operators, Hong Kong is home to multiple earth stations, including the Stanley Earth Station (pictured), as well as earth stations for APT Satellite and AsiaSat. Hong Kong is also home to SpeedCast, the world’s largest satellite service provider by some measures. SpeedCast continues to grow at a rapid pace through acquisition and market growth. Despite having initially been a sort of carve-out from AsiaSat, SpeedCast is now several times the size of its former parent company in terms of revenues, and, despite still maintaining a company HQ in Hong Kong, has a very small percentage of its workforce or revenues in the fragrant harbor.

The Future for Satellite in Hong Kong

Like many other industries, the satellite industry in Hong Kong faces a future that is, to some extent, uncertain. The departure of broadcasters such as Turner from Hong Kong, as well as the general decline of Hong Kong as a media hub, have forced satellite companies in Hong Kong to evolve. While having never solely relied on their home market for business, Hong Kong satellite operators have been forced to go abroad for a larger share of their business, and will continue to do so in the future.

AsiaSat’s recent announcement of intention to privatize is but the latest example of the declining importance of satellite in Hong Kong. While AsiaSat’s privatization may well be the correct financial decision from a company perspective, it will be a sad day if/when Hong Kong Stock Exchange ticker 1135 stops trading.