In business strategy, seizing upon temporary opportunity can be of great value if the firm is placed in a position to make use of such fleeting chance. A good case study is the Starlink barring Ukrainian customers access to its fast internet connection. French satellite operator Eutelsat got a god sent opportunity. Can it succeed?
At the behest of Trump Administration, Elon Musk ordered Starlink to cease provision of satellite based fast internet facilities to its customers throughout Ukraine. But he was sure of one thing. The vacuum could not be filled by any other firm. Here is the meat:
Despite trebling of Eutelsat share price as a consequence of this announcement by Starlink on Ukraine, Eutelsat which at present have about 2000 terminals in Ukraine has drawn out a grandee project of increasing its market presence to more than 40,000 terminals.
As a fully integrated satellite company Eutelsat has 35 Geostationary constellation along with more than 600 low earth orbit (LEO) constellation, orbiting 1,200 km above earth enabling high speed internet service to countries in Europe, Middle East & North Africa (MENA), Asia & America. It is uniquely positioned to provide both mobile and fixed connectivity.
Yet here is the punchline on operational side. Firstly, in order to meet the demand from Ukrainian clients the company needs more low earth orbit satellites in its operational base. Secondly the current financials would not support the proposed expansion. For the first half of financial year 2024-25 its revenue of Euro 606 Million resulted in a net loss of Euro 124 Million.
One way to
alleviate these issues is to go for massive cash infusion
to finance required capital expenditure. Finding Billions of Euro in the short
span is out of question for the firm unless the European Union is agreeable to
give generous grants amid opposition from countries like Hungary.
The fact of the matter is matching Starlink in terms of techno spread and service depth is beyond the reach of Eutelsat. For example, Starlink operates 6,750 low earth orbit satellites hovering around 500 km above Earth facilitating high-speed, low latency secure internet service across the globe.
Admittedly, Starlink is a juicy source as its earnings for 2024 amounts to US$ 8.2 Billion and net take is estimated at US$ 1.6 Billion. For Eutelsat to get this plum is just a wet dream.
Replacing Starlink services to Ukraine is not practical at all. The better business strategy is for Eutelsat to strike a kind of partnership with Starlink to use the latter’s satellites to transmit limited satellite based internet services for the use of non-military clients in Ukraine.
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
No comments:
Post a Comment