Satellite
The sky’s no limit for NewSat
Robert Gottliebsen, Management Insights
Our Management Insights interview with the chief operating officer of NewSat, Michael Hewins, is an inspiration to all those who believe small companies can succeed in the current environment if they have the right technology.
Incredible as it may seem, the low-cap Australian-listed NewSat provides the satellite communications for the US land forces in Afghanistan.
The Australian army believes that it is better to use satellites linked to China for its Afghanistan military satellite communications.
NewSat operates satellite teleports out of Adelaide and Perth and its services have been so successful in coordinating the US Afghanistan land forces that the US military wants NewSat to go the next step and extend its satellite operation from simply operating satellite communication to owning a satellite or satellites.
Remember this is a company whose shares are at 0.7 cents and has a tiny capitalisation, although it is profitable. But with the right technology, and the US military behind you, anything is possible.
And that’s why American satellite expert Michael Hewins has come to Australia to join NewSat chief executive Adrian Ballintine – to give NewSat the management clout to take the next step.
Satellite spots are not easy to obtain and NewSat has bought seven of them.
Hewins explains how a tiny company can fund a $US300 million to $US400 million satellite from Australia.
First, you need to sign up groups who will use the satellite so you have a guaranteed source of cash flow. NewSat has contracts with major satellite users who have so far agreed to spend $US239 million on NewSat’s proposed Jabiru-1, Ka-band, next generation satellite.
NewSat says Jabiru-1 will provide superior coverage over South East Asia, the Middle East and North Africa plus Australia. It will be Australia’s first independently-owned commercial satellite. NewSat still needs more contracts but the demand is building so a second satellite is now in the pipeline.
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NEWSAT ANNOUNCES MAJOR NEW DEFENCE CONTRACT
• $4.4m contract to provide communication services to US Military troops in Afghanistan;
• Represents over $10 million of contracts won in the year-to-date.
NewSat Limited (ASX: NWT) today announces it has won a new contract to provide Satellite Communications services to US Military troops in Afghanistan. The contract is worth $4.4 million of additional revenue per annum, commencing in June 2011.
The contract will see NewSat providing welfare communications for military personnel in over 15 locations throughout Afghanistan. The contract also has the option for NewSat to extend for a further year.
This latest contract takes NewSat’s year-to-date contract wins to over $10 million in new revenue in addition to NewSat’s current contract base and high retention rate. For reference, NewSat’s revenue in the year to 30 June 2010 was $25 million.
Recent contract wins contributing to the cumulative total include;
• $1 million for 30 high-grade contracts for oil, mining and gas exploration sites in remote regions of Australia – Atlas Iron, Crescent Gold, Apache Energy and Esso Highlands PNG (a subsidiary of Exxon Mobil);
• $2 million contract with Nixon Communications providing communication services to four major construction camps along the new LNG pipeline in Queensland;
• $800,000 for multiple contracts providing communications for Australian and international resource projects;
• $2.4 million contract providing communication services to the US Military troops in Southern Afghanistan;
• $600,000 for multiple contracts providing communications for significant resource projects in Australia and LNG in PNG;
In commenting on the most recent contract win, Adrian Ballintine, NewSat’s Chief Executive Officer, said:
“The US Military requires high-performance, reliable and secure communications. This new contract win, together with NewSat’s recurring work for the US military, demonstrates NewSat’s world-class capabilities, products and services.
NewSat has been a long term service provider to the US military. Our expertise and relationships in this market will serve us well for our first geostationary communications satellite, Jabiru-1, which will focus on high value customers in the military, defence and government markets as well as other high value enterprise segments such as resources.”
Mr Ballintine commented “Jabiru-1 continues to attract customers from around the globe and term sheets for space on the satellite are numerous and substantial”. He said, “It is anticipated that the company will make further detailed announcements about Jabiru in April, a little later than anticipated, but not unexpected in the light of the Japanese tragedy and its effect on global markets”.
“We expect that the Jabiru announcements will be exciting and company changing”, said Mr Ballintine.
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