Yahsat expects up to 8% revenue growth in 2022 driven by government contracts

The company looks at growing its business with new acquisitions, its chief financial officer says

Yahsat offers multi-mission satellite services in more than 150 countries across Europe, the Middle East, Africa, South America, Asia and Australasia. Photo: Mubadala Investment Company

Al Yah Satellite Communications, better known as Yahsat, expects revenue to grow up to eight per cent this year on government contracts, its chief financial officer said.

The Abu Dhabi-listed company, owned by Mubadala Investment Company, expects its 2022 revenue to grow in the range of $420m and 440m. “Somewhere around $430m is reasonable … a growth of around 3 and 8 per cent for the full year,” Andrew Cole told The National in an interview on Tuesday.

The company reported $407.5 million revenue in 2021.

Its managed solutions business, which involves providing satellite communication services to the UAE government, will drive the revenue growth for the year, he said. About 85 per cent of the company’s revenue comes from the UAE market.

Founded in 2007, Yahsat offers multi-mission satellite services in more than 150 countries across Europe, the Middle East, Africa, South America, Asia and Australasia.

It has a current fleet of five satellites that extend its reach to more than 80 per cent of the world’s population, enabling critical communications such as broadband connectivity, broadcasting as well as mobility solutions.

Yahsat is planning to launch the Thuraya 4 Next Generation Satellite (T4-NGS) in 2024 to boost its operations. The satellite is expected to commence commercial services in the first half of 2025.

T4-NGS was originally expected to launch in the second half of 2023 and start services in the second half of 2024, but the company now expects a delay of up to six months in the delivery of the satellite by Airbus. It did not provide the reason for the delay.

The company is bullish about “growth opportunities” amid the launch of the new satellite and the UAE government’s focus on space exploration and other related projects.

There “is a $700m government contract attached to Thuraya 4, which when it becomes operational will add $50m to our top line from 2025 onwards”, Mr Cole said.

The company is also looking to replace two existing satellites Al Yah 1 and Al Yah 2 with two new satellites, Al Yah 4 and Al Yah 5 in 2026 and “there is a long-term contract attached to that already”, he said.

The new satellites “will operate side by side with Al Yah 1 and Al Yah 2 and ultimately replace them … the continuity of the government business is reasonably secure”.

The UAE government focuses on putting the “UAE at the forefront of space exploration”, which will provide further opportunities for the company, Mr Cole said.

Yahsat also plans to grow its business connected to maritime, oil and gas, Internet of Things, direct to device services and others.

“At the moment we are quite small in maritime, we are very focused on niche areas like the fisheries sector, particularly in Vietnam, we have an ambition to grow that beyond Vietnam to other parts of the South-East Asia region.”

The company is looking at more acquisitions following its investment in eSat Global, a US-based IoT connectivity solutions provider earlier this year.

“We have $600m in cash … in the next year or so there could well be some level of M&A activity at Yahsat,” he said. The company is looking at growing its business, he said.

“We want to protect and defend and nurture our core business, which is UAE government,” he said. “Equally we are looking at growing our commercial business, the data solutions business and some of the key growth areas like IoT and maritime.”

Yahsat on Tuesday reported a 16 per cent jump in its third-quarter revenue to $109m compared to $94.1m for the same period last year as it continues to focus on boosting growth.

The company’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the third quarter rose more than 21 per cent to $66.9m, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

It reported a net loss of $10.21m, attributable to the shareholders, for the period compared to a profit of $13.1m during the third quarter of last year, as other operating expenses rose. Profit was also affected as a result of an impairment charge of $40.5m related to an investment in Brazil.

Yahsat's nine-month profit dropped about 19 per cent to $35.1m.

Capex and investments for the year are expected between $150m and $170m, the financial statement showed.

“Our core government business has performed particularly well with quarterly revenue in our managed solutions business more than doubling year-on-year,” Ali Al Hashemi, group chief executive of Yahsat, said.

Through the procurement of the T4-NGS satellite, “we remain well positioned to meet the UAE government’s increasing demand for advanced satellite communication solutions”.

The satellite operator raised about $731m from its initial public offering last year.