New internet operator will offer competitive pricing

How does Yahsat aim to recoup its $1.6 billion investment?

Severed undersea internet cables will not be a problem for the future customers of Yahsat, Abu Dhabi's first commercial satellite company.

High-speed broadband is just one source of revenue that will help offset costs of up to $1.6 billion for Yahsat's two satellites.

Following its launch into high orbit, the Y1A satellite will beam down television and telecommunications services to more than 20 countries in Asia, the Middle East and Africa. Yahsat plans to launch a second satellite in the final quarter of this year.

Eisa Al Shamsi, a payload engineer at Yahsat, said that the commercial operations would begin in June.

"After the launch, we need to bring the satellite to its orbit. Once the in-orbit testing is done, we can begin our commercial operations," he said.

There are five main services on offer from Yahsat. These include 'YahClick' which will provide broadband to users in the Middle East, Africa and South-west Asia, and 'YahLive', which, through a partnership with the European satellite TV operator SES ASTRA, will offer television broadcasts across the region.

Other services will be geared towards military and aviation clients.

Yahsat already has commercial deals in place, having signed with 25 licensed operators across the Middle East and Africa, as well as a 15-year agreement with the UAE Armed Forces to provide an "integrated satellite communications network and control centre".

Its broadband services will be geared towards locations beyond the reach of traditional telecoms operators, such as in rural areas with little or no infrastructure.

Internet uptake in many parts of the Middle East and Africa is low in comparison with developed markets, marking a commercial opportunity for Yahsat.

Jassem al Zaabi, the chief executive of Yahsat, said last year that broadband packages would be priced at US$40 per month.

Irfan Ellam, a telecoms analyst with Al Mal Capital, said this sounded "competitive" compared with other broadband packages on the market - but added that it depends on the quality of connection.

"That is competitive. But it depends on what they're offering: the question is what speeds and data limits will be," said Mr Ellam.

Mr Al Shamsi said that satellite broadband would be especially suited to governments, schools and hospitals in areas with no infrastructure. But he said that it would also be available to consumers. "I won't say it's a replacement for Etisalat and du, but it's a new concept. You have the option," he said.

Satellite internet would not be affected by problems with undersea internet cables, Mr Al Shamsi said. In March, a severed cable saw disruption of services across the Gulf, with around 30 per cent of the internet capacity offered by the operator du affected.

To be commercially successful, TV and broadband services would have to be "keenly priced", especially in the African markets covered by Yahsat, Mr Ellam said.

Under the 'YahLive' brand, the satellite company plans to beam free and paid-TV broadcasts in high-definition to more than two dozen countries including Iraq, Pakistan and Iran. Yahsat has held talks with TV providers to carry their stations over the satellite feed.

Existing satellite operators in the TV space include Nilesat and Arabsat. Mr Ellam said that the success of Yahsat's TV operations will depend on the content deals it is able to strike.

"The question is what content they're going to be distributing that other operators aren't," he said.

Yahsat is a subsidiary of the Mubadala Development Company, a strategic investment company controlled by the Abu Dhabi Government.