MEASAT-A Potential Buy?

This just came in today (June 21)

Measat Satellite Systems Sdn Bhd (MEASAT)is targeting to reap higher revenues of US$100 million (RM354 million) annually in the next three to four years, up from US$60 million last year from new businesses arising from the launch of its two latest MEASAT-3 and MEASAT-3a satellites.

Paul J Brown-Kenyon its chief operating officer said the company also has in hand revenue of US$600 million, which would be raked in from contracts ranging from three, five and 15 years.

The company, which has spent RM1.6 billion in the last four to five years, is looking to launch joint venture satellites with partners who could bring in capital and in the process, spread risks.

MEASAT-3 launched in 2006 and MEASAT-3a, which will be launched Monday morning on June 22 at 5.30 Malaysian time from the Baikonur Cosmodrome, is expected to expand the business,” he told journalists here yesterday.

This means that MEASAT’s sister company, Astro would be able to provide more channels to its customers while expanded services would be available for clients such as Telekom Malaysia, Maxis and Celcom.

“They will have the ability to provide more communication services to more customers, he said.

Brown-Kenyon said the US$165 million MEASAT-3a would be operational by end-July or possibly even earlier, and then would start serving customers.

“Two satellites give us an enormous amount of peace of mind as we would be able to expand our capacity and deal with redundancy issues associated with old satellites,” he said.

He said MEASAT-3 was close to full capacity in terms of take while Astro had already booked half of the transponders on MEASAT-3a, which means new services, new channels, and increased content.

Asked when MEASAT could recoup its expenses for the new satellite, he said that investments and costs in the satellite business would dilute earnings in the next 12 to 18 months, “but after that, revenue goes up.”(That means good things will come only after December 2010)

In terms of payback, he said that it would take about six to seven years to repay the US$165 million MEASAT-3a.

Satellites have a 15-year life mission.

“In our industry, we can’t be a small player because of the huge capital investments, which is why we need to be a big player but the good thing is that MEASAT-3 and MEASAT-3a have a very strong customer base.

“Beyond MEASAT, we are looking always to grow the business. We are looking at Africa as a region and we are at the moment discussing with a number of partners about doing joint venture satellites in that part of the region.”

He said MEASAT was mulling joint venture satellites as the strong customer base means the capacity in the two MEASAT satellites would be used up quickly.

“We have access to 17 orbital slots throughout the world and each allows a satellite to be launched into a new region”, said Brown-Kenyon.

“We are in a growth phase and we have very successfully built up a strong Malaysian base and growing regionally in India, Indonesia, with good broadcast customers such as British Broadcasting Corporation (BBC), National Geographic and History Channel,” Brown-Kenyon added.

So watch this counter closely and buy on weakness.