Analysis company Northern Sky Research (NSR) says that the fall is the result of the Covid-19 pandemic, “and the recovery won’t be immediate”.
But there will be a recovery, says NSR’s analyst Lluc Palerm. “The underlying opportunity continues to be exceptional with revenues forecasted to grow at double-digit rates in the 2023-2029 period.”
Some areas of the business will suffer severe readjustments in this period, he writes in the new report, the latest edition of the Global Satellite Capacity Supply and Demand survey.
“Aero is probably the most impacted for the next 18-24 months with big portions of fleets being grounded,” writes Palerm. “Maritime is slightly less impacted with some segments like merchant or fishing still sustaining a large active base. Cruise is surely impacted, and it is still uncertain how the market will recover.”
However, “video revenues will continue degrading, although this cannot be associated with Covid-19 and is dependent on pressure from [over-the-top] platforms and degradation of capacity prices”.
But fixed broadband applications show high levels of resiliency, says the NSR report. “Consumer broadband and backhaul show similar dynamics. The installed base has seen bandwidth requirements grow, leading to a migration to premium plans. However, new installs have been put on hold due to supply chain challenges and lockdowns.”
NSR notes that “a wave of bankruptcies [has] shocked the industry, many times using Covid-19 as an alibi”. But the report is sceptical about Coronavirus being to blame. “But the truth is that all these developments were generally bound to occur, and Covid-19 may have just provided the extra boost for the industry or the market to clean house.”
OneWeb, which is now being auctioned off – with the results due later today – has a “business case [that] continues to be questionable, and key elements of the technology mix such as consumer-terminals are unresolved yet”, says NSR’s report.
“Intelsat is overleveraged,” the report says: in other words, its debt is too high. “It has been on the verge of bankruptcy for years.”
NSR says it expects to see further merger and acquisitions activity.
And interest in companies such as OneWeb “signals renewed interest in the preservation of technology, support for innovation”, and this “underscores the unique value the satellite industry brings to the marketplace”.
