Last Updated: March 2002
Afro-Asian Satellite Communications
ASC uses two satellites, covering 54 countries from Turkey to Singapore, and Sri Lanka up to Russia. The first satellite will concentrate on India. Costs of hand held phones reported to be $700 - 1000 and the cost per call $2 per minute.
The partners are Essar Telecom and Essel Group, VSNL. Originally the system used Hughes satellites, but now has signed with Lockheed Martin.
Business World 31st May, 1999
By putting Agrani in the sky, Chandra hopes to offer mobile telephony services across the length and breadth of India. If his plan pans out, the company floated for this purpose -- ASC -- will rake in revenues of Rs 2,000 crore by 2005, its fourth year of operations. There's more: ASC expects to generate a cash flow -- of $65 million -- in the second year itself, by when 80,000-90,000 subscribers would have been signed on. By 2010, Chandra wants to net a whopping 700,000 subscribers. He expects them to come to him because he plans to keep his costs at just Rs 20-22 per minute per call made to and from any part of India. ASC's USP: calls made over a 500 km distance will work out much cheaper than a land line call (over the same distance). The handset, at $400, will be much cheaper than those of all his competitors. The pricetags of the handsets of Iridium, ICO and Globalstar -- which are offering similar services on a global scale -- are pegged at $3,000, $700 and $450, respectively.
The Agrani satellite's utility doesn't end with mobile services. And this is where the synergy with Chandra's broadcasting operations becomes apparent. The satellite will also have also have Ku band facilities, which will eventually be used to provide direct-to-operator (DTO) and direct-to-home (DTH) services. It boasts of 10 high-power transponders, which are capable of transmitting 60 digital channels to India and the Middle East. Zee has pre-bought 60% of the Ku band capacity for these services.
By having his own satellite, Chandra can steal a march over his equal stakes broadcasting partner, Newscorp chief Rupert Murdoch. Currently, Zee relies on the transponders leased out to Asia Today (ATL), in which Chandra and Murdoch each has a 50% stake. Sources point out that Chandra wishes to go it alone with his DTO and DTH projects (Zee has to pay ATL 70% of its ad revenues, half of which naturally go to Murdoch). And if he has his own satellite, he doesn't need ATL -- and Murdoch -- any longer.
Today, though, Agrani still looks very much a pie in the sky. After all, if Iridium could backfire so badly -- the global system has been able to garner just 10,000 subscribers and analysts are now lowering the stock's rating to under-performer -- how in heaven's name can Chandra hold his own? Like Iridium, ASC too might find it difficult to generate enough revenues to meet its banking covenants. Make no mistake, if Agrani bombs, it won't be just a Rs 3,170 crore disaster: paying back loans of Rs 1,575 crore (at interest rates as high as 17.5%) could break Chandra, whose personal wealth is valued at roughly Rs 1,900 crore.
It's going to be tough, long haul. But he's already survived a good part of it. Chandra had conceived the satellite telephony business way back in 1994. The original plan was to offer mobile telephony services to consumers in Africa and Asia. Around the same time, Iridium, Globalstar and ICO also began putting together blueprints for similar services, but on a global scale. Iridium's project cost, for instance, is estimated at $5 billion. Chandra's vision didn't involve a global system, yet even for an Afro-Asian reach he would need to scrape together at least $1.25 billion.
That didn't faze Chandra. Instead, he created a company called Afro-Asian Satellite Communications (ASC), and made Mauritius its base. He then took on Hughes Network to supply the satellite system. It was, in hindsight, a wrong decision. After investing $40 million in the project, Chandra realised that Hughes was unable to deliver what he was looking for. Hughes walked out on the project.