In a recent interview with Space in Africa, MzansiSat’s Chief Operating Officer, Victor Stephanopoli, confirmed the company is still on course and bullish on owning space assets that provide connectivity for the African market. However, the company is experiencing delays in securing regulatory approval and public sector buy-in from the South African government.
MzansiSat originally planned to launch and operate a geostationary orbit communications satellite dubbed MzansiSat-1 by 2022 to provide satellite internet broadband using C- and Ku-bands. However, Stephanopoli said they are adopting a “gap-filling” strategy by acquiring a satellite in orbit and changing its orbital position to service the Southern African market.
“Satellites take time to build. So the strategy would be once we have a deal [with the government], we shall make use of a satellite that already exists. We’ll change its position in orbit into our position, and we’ll start the service. It is going to be a soft service. It’s not going to be as powerful as a new satellite. But during that transitory period, we can start providing the service and build a new satellite. We are going to launch and install the new satellite when it is ready, and de-orbit the old satellite,” Stephanopoli explains.
According to information on its website, MzansiSat is looking to collaborate and work with South Africa on filing for additional resources under its planned bands under Telecommunication Union (ITU) regulations. The company says the approach has several advantages, some of which include expedited regulatory filing at the ITU and retaining South Africa’s control over its orbital resources.
Since 2013 when MzansiSat was founded, securing regulatory approval and a viable public-private partnership has become a herculean task for MzansiSat and an impediment to hitting its next milestones in terms of technology and market entry.
This regulatory hurdle appears to be an administrative shortcoming on the part of the government and generally, the sluggishness of the public sector to efficiently adapt to rapid changes in technology and business.
Stephanopoli pointed out that under the Jacob Zuma administration, the specific section on the government’s telecoms and the ICT white paper pertaining to the relevance and opportunities of Satellite Telecoms Development in order to develop South Africa’s ICT infrastructure got struck out.
However, he expressed optimism that the members of the government have become more receptive and possibly looking for reliable solutions that are crucial to salvaging the effect of the COVID19 pandemic.
“I think the coronavirus pandemic exacerbates the problems the country already has. The government has realized that its infrastructure is not in as good shape as they would have liked it to be. Systemic failure is imminent in a lot of places. And what we are saying is that we have the technology that works and can connect people.”
Although many experts believe satellite internet broadband has an enormous potential in providing universal coverage over Africa, owning a geostationary communications satellite is no small feat due to its huge capital requirement.
Stephanopoli said that MzansiSat has a budget of 350 – 450 million euros to fund the project, including the cost of owning a GEO communications satellite and setting up the ground infrastructure.
“We want to raise that through loans and pay off the loans over a very long period. This is also usually how the industry finances geostationary satellite projects. If you are thinking of minisatellite or constellation space projects, that is more like the territory of venture capital and private equity firms because it is exciting and risky. But our satellite, despite all its exciting applications, is not much more exciting than building a new train line or pipeline. A bank is, in fact, in my eyes, our optimal partner because they hate risk as much as we hate it. And, they appreciate predictable cash flow as much as we do,” he added.
MzansiSat as a company is still self-funded and “very happy” as Stephanopoli subtly said. The company intends to raise loans from South African financial institutions in such a way to domicile both the economic benefits and lability in South Africa.
The company plans to provide satellite broadband services to internet service providers (ISPs), network operators and government agencies only in a B2B and B2G business model.
“Direct to consumers (DTC) is not on the cards. It’s just not what we specialize in. It takes a particular skill set, which we do not have. The moment where you are starting to sell DTC, you also need an entirely different regulatory and licensing framework.”
“We are planning to sell to South African and Southern African internet service providers and network operators. The ISPs all have their national legitimization and licensing. And we can sell to them without requiring national licensing because we are governed by international legislation, not local legislation. It is a nice win-win because we don’t have to deal with local spectrum control policies.”
Earlier before the current global trend of building mega low and medium Earth constellations became popular, some experts predicted that demand for satellite services in Africa would decline sharply as the network of fibre-optic cables across the continent expand. But that prediction has been flawed, as the overall usage for satellite capacity in Sub-Saharan Africa increased by 11% CAGR between 2009 and 2014 notwithstanding the growing expanse of terrestrial fibre networks.
While Stephanopoli sees rapid decline in satellite broadcasting services and a great future for smaller satellite constellations, he believes Africa lacks the financial ability to invest capital worth over 6 billion euros in an Africa-focused constellation capable of delivering high-speed broadband internet to every nook and cranny of the continent. Also, he says the unit economics to justify such a massive investment in Africa is lacking. A Satcom constellation with a minimum of 68 satellites is at least 5 billion euros.
“In the future, a broadcasting satellite might just be another broadband satellite with much higher throughput. So people might move more into on-demand content, which means you can still run that over Ka-band satellites. When we talk about Ka-band satellites, I see a trend going towards smaller satellites, constellations, rather than having big monolithic broadcasting satellites in orbit.”
“I think a purely African constellation is a NO. That is why we are saying, why does it have to be a Ferrari, if you’re going to do the same thing more or less as well in a Volkswagen Golf? You can onboard more people, and it is more affordable for more people. It is easier in terms of product development across the chasm.”
“When you have a user base which gets increasingly savvy and specialized, then you’re going to have people who actively will ask for faster speeds, not just decent coverage. I don’t see right now the business case or cash flow in the African economy to sustain a large constellation.”
“What we need in Africa right now is universal coverage. So wherever you are, you can realistically log on to the internet and interact or transact. And maybe in five years or ten years from now, we can say, let’s launch a purely African constellation. When we have the confidence, the money, the people who will use it, then we can make a business case out of it.”