Yahsat plans more acquisitions as it expands in IoT market

Al Yah Satellite Communications, better known as Yahsat, is seeking potential acquisition opportunities worldwide in the Internet of Things (IoT) sector following its investment in eSat Global, a US-based IoT connectivity solutions provider, according to a senior executive.

The UAE-based satellite solutions provider is in talks with several start-ups operating in the IoT sector, Sulaiman Al Ali, Yahsat's chief commercial officer, told The National in an interview.

"We are studying the market very actively and we are looking into what are the new opportunities that are coming up," he said.

The acquisition of eSat Global is the "first step towards achieving Yahsat's IoT strategy, and it's our key ambition to be a major player in the IoT market".

The overall IoT market is projected to grow at a compound annual rate of 22 per cent over the next five years to $525 billion, and the satellite IoT business is forecast to generate a cumulative revenue of $6bn over the same period, according to Yahsat.

Currently, start-ups globally are identifying opportunities in the varied segments of the IoT market, Mr Al Ali said.

"We are really looking into these companies. We are actively interacting with them, directly or through some of the exhibitions that we attend. So, the strategy is there, and we are really studying it [the market], and when the right opportunity will come, we will be there."

In terms of market opportunities, segments such as smart agriculture, environmental monitoring, digital maritime and cold-chain tracking are some of the areas that require IoT solutions.

While eSat has submitted some proof of concepts, Yahsat, as part of the investment, aims to have commercially viable solutions by the fourth quarter of 2023.

The acquisition offers strong financial return and the "growth expectation is really good", Mr Al Ali said.

"Some of the solutions will have an immediate requirement in the market ... like the oil and gas segment — they have a lot of requirements for monitoring. And we have the requirement that is coming from livestock," he said.

Mr Al Ali cited an example of farms in Australia, where there is a need to tag the cattle and track their location as well as biometrics.

Outside of IoT, Yahsat has also identified strong market potential in the government segment — which is "growing" both in the UAE and internationally, as well as the maritime segment, where it has already had a lot of "success".

The company is also working on the Thuraya 4 Next Generation satellite (T4-NGS), which is scheduled for launch next year and commence commercial services in the second half of 2024.

"[With the satellite] we'll be adding to the industry a lot because we are coming with the capability that was never available in the mobile satellite industry before."

Looking ahead, despite warnings of slowing economic growth worldwide, Yahsat — which offers multi-mission satellite services in more than 150 countries — is confident about continuing growth.

Yahsat raised its projected 2022 revenue by 1.3 per cent at the end of the first half 2022 to at least Dh1.54bn ($419 million) from the earlier guidance of Dh1.52bn, keeping the upper end unchanged at Dh1.62bn.

The Abu Dhabi-listed company’s first-half revenue stood at Dh755m, up more than 8 per cent from the same period last year. Net profit attributable to shareholders for the six-month period was Dh167m, up more than 50 per cent from the same period in 2021.

"If we think about the company's journey overall, our business is resilient and the global macro effect of inflation and volatility ... we did not see the effect of it," Mr Al Ali said.

Indexation in its longer-term and major contracts has helped ensure that fluctuations caused by inflation do not affect the profitability of the projects. The company's debt is also at a fixed rate, so it remains unaffected by volatility in the market.

Yahsat has also not seen a rise in its operational expenditure so far.

"The majority of the G&A [general and administrative expenses] is coming from staff-related and other costs, and we think that will continue to be sustained until the end of the year," Mr Al Ali said.

"We see a lot of changes, a lot of the geopolitical things are happening around the world. It will have impacts that we need to study. So I think we are aware, we are prepared and we are a very agile company that can maneuver easily around these obstacles."