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KUALA LUMPUR, Malaysia — China’s presumed ambition to snatch up satellite spectrum by purchasing struggling satellite operators around the world was one of the hottest topics at this years APSCC conference, despite the absence of the Chinese government.

Industry officials said that, whatever the U.S. government’s future policy toward China — the current policy can be summarized as, ‘We wish China’s space program would go away’ — a Chinese foothold among established Middle Eastern, European, Latin American and Asian operators is a likely part of the industry’s landscape within a decade.

Aside from an increased role in East Asia’s satellite market, notably through fleet operator APT Satellite Holdings of Hong Kong, these officials said indications are that China has identified satellite telecommunications as a strategic value far beyond assuring China’s formidable domestic needs.

That ambition, combined with the fact that fixed satellite services market trends suggest multiple satellite operators will be up for sale in the coming years, has opened a window for China.

Chinese ambitions beyond Israel suspected, not confirmed

Whether Chinese interests will seize the opportunity is unclear. To date, only one confirmed operation has surfaced. The $285 million purchase, by Beijing Xinwei Technology Group, of Israel’s Spacecom appears to have cleared Israeli government approval, albeit with caveats.

The transaction is now suspended over what may be nothing more than a valuation assessment following the Sept. 1 loss of Spacecom’s Amos-6 satellite in the explosion of a SpaceX Falcon 9 rocket preparing for a static-fire test.

Spacecom and other industry officials had said Xinwei had intended to use Spacecom — to be owned via a Luxembourg company — as the first step in an attempt to consolidate multiple satellite fleet owners under its roof.

The Amos-6 satellite’s importance to Spacecom is difficult to overstate, and negotiations over the company’s sale continue. Among other conditions set by Israeli authorities were that the physical operation of the Spacecom fleet remain on Israeli territory.

Global satcom market seems ripe for consolidation

The satellite telecommunications market is traversing a difficult patch. Publicly traded companies no longer can sell their investors a high-growth story and now must offer dividend yields that some are having trouble maintaining.

Operators with heavy investment in Africa and Latin America in particular are struggling, and Asian fleet owners are warning investors that the road ahead will be rough, especially given Asia’s crowded, competitive market.

One- or two-satellite fleet owners owned by national governments are likely to be under pressure to get out of the business in the coming years as satellite bandwidth prices continue to fall. Given its weight in Asia, the Chinese government could well be viewed as a white knight coming to save otherwise doomed national satellites.

The situation is more dire in Latin America and Africa. Satellite fleet operator Avanti Communications of London, heavily exposed in Africa, has put itself up for sale. Industry officials said at least one Chinese group has expressed interest.

“There is a move in China to buy satellite businesses,” said Huang Baozhong, executive vice president of APT. “The recent example is the announced takeover of Spacecom by Xinwei. But there are others trying to acquire more satellite businesses around the world.”

Huang said China’s space market, arguably the world’s most dynamic alongside the United States, has developed to the point to where Chinese authorities believe they may need their own global low-orbiting constellation of satellites for Internet delivery.

He said China was unlikely to join any of the constellations now being proposed in Europe and the United States, including OneWeb and LeoSat, out of both strategic interest and national pride.

One Western industry official with a professional interest in keeping the market the way it is — that is, with the U.S. government banning the export of U.S. satellites or satellite parts to be to China — said that at the very least, Chinese ownership of satellite operators would provide an additional market for Chinese rockets and satellites.

The U.S. government in the past has used its influence and the ban on satellite exports to stop Chinese interests from purchasing interests in satellite operators whose existing assets include U.S.-built satellites in orbit.

Long-sought opening for China’s satellite and launch-service exporter

But the U.S. government is isolated in its policy. The signs of that isolation are ever-more apparent as South American, African and Asian nations purchase turnkey satellite communications systems including Chinese satellites and Chinese launchers.

In an extraordinary example of the erosion of support for U.S. space policy toward China, the space program director at Mitsubishi Heavy Industries (MHI) of Japan, which is prime contractor for Japan’s national H-2B rocket, in September said MHI would prefer that the United States end its ban on Chinese participation in much of the global commercial launch market.

The announcement was as surprising as would be a declaration by United Launch Alliance of the United States, the near-monopoly launch-services provider to the U.S. government, that competitor SpaceX should by all means get immediate full access to the U.S. Defense Department market.

For China Great Wall Industry Corp. (CGWIC) of Beijing, China’s lead exporter for both satellites and launch services, a scenario in which Chinese interests own established satellite operators around the world looks like paradise.

“Our customers so far have been national satellite operators with no experience in satellite systems,” Fu Zhiheng, CGWIC vice president, said Oct. 5 at the APSCC conference. “But we know that in order to stay in the commercial market, we need to target the established operators. It took us a long time to get a contract with a customer like APT. We just launched Apstar 9 for them and this has given us experience.

“Right now, for some Chinese companies, satellites seem like a good investment. You saw the possible acquisition of Spacecom by a Chinese company. I think it’s just the start. There will be more Chinese companies going into satellite services. We think it could give us a good start to entering the Western commercial market.

“A few years ago a [satellite fleet operator] was put up for auction. Chinese companies were interested in buying but were prevented by the U.S. government. But this time they [the prospective Chinese buyers] were smarter and understood the rules of the game.”

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