Bangabandhu Satellite-1 and My Skepticism

On 11th May 2018, Bangladesh launched its first satellite. It is a matter of pride and joy. Whole nation was very excited to have the very first satellite sent to the space. Through this event, Bangladesh has marked its footprint in the vast space. The very first satellite has been named Bangabandhu Satellite-1 (BS-1) after the father of the nation Bangabandhu Sheikh Mujibur Rahman. As of 2017, there has been total 7,900 satellite has been launched in space so far. Out of these many satellites, less than 2000 is active and currently usable. BS-1 is the latest addition to those active satellite.

Bangabandhu Satellite-1 position and its coverage area (Source: Wikipedia)

Bangabandhu Satellite was designed and manufactured by Thales Alenia Space and its launch was provided by SpaceX. According to Wikipedia, total cost of the satellite was projected to be 248 million US dollars in 2015 (Tk 19.51 billion) out of which $188.7 million was financed via a loan from HSBC Bank (HSBC Holdings plc). As for technical details, Bangabandhu Satellite-1 carries a total of 40 Ku-band and C-band transponders with a capacity of 1600 megahertz and a predicted life span to exceed 15 years. The satellite will expand Ku-band coverage over all of Bangladesh and its nearby waters including the Bay of Bengal, India, Nepal, Bhutan, Sri Lanka, the Philippines, and Indonesia. This is coupled with C-band coverage for all aforementioned areas. As the first geostationary satellite, BS-1 will be orbiting in orbial slot of 119.1 degree which has been rented out from Russia. As a result the satellite will be geostationary on Indonesia. That means best output or benefit from BS-1 can be obtained from Indonesia, Philippians and nearby countries.

The priority operation of BS-1 would be: Direct to Home (DTH) service for TV channels, VSAT, backhaul and trunking, network restoration, disaster preparedness and relief. As of now, Bangladesh rents all of these services from satellite service provides in the region. It nearly costs around $14 million per year. Now Bangladesh can save the amount and rent out the excess capacity to the other countries in the region and earn up to $50 million per year through renting out 20 of 40 transponders to the foreign countries. Rest 20 Transponders will be used by Bangladesh.

Government is estimating that cost of building and launching this satellite will be recovered in 7 years. Government has established a company called Bangladesh Communication Satellite Company Limited (BCSCL) to operate BS-1. BCSCL is responsible for managing and generating revenue from BS-1. As per government officials, it has already started searching for client in Indonesia, Philippines & nearby countries.

Now, Launching Bangabandhu 1 Satellite seems to be a profitable venture by Bangladesh considering the benefits expectations from it. However, I am really skeptic about this satellite project. As an audit professional, it has become my habit to skeptic about each and every thing. BS-1 is no exception. Let me discuss about my points.

  1. Government  has came to power with manifesto to digitize the country. Launching the satellite is a major step toward the digitization of the country. However, I’m not sure whether we have adequate resource and people to manage the satellite and getting maximum benefit out the satellite.
  2. BTRC is expecting to recover the cost within 7 years. I am not sure whether this cost includes the interest to be paid to HSBC bank and the satellite maintenance cost and orbital insurance cost. Furthermore, i am not sure whether the time value of money has been considered or not.
  3. BS-1 is geostationary in Indonesia. So countries around Indonesia will have better signal. Hence Bangladesh is not the primary beneficiary of this satellite.
  4. The satellite is expected to be alive for 15 years. That means whatever benefit we can obtain from this has to be received within this period. As most of the revenue will be coming from selling access to foreign country. Normally access right are sold before launching the satellite. But in our case, we only initiated customer search after launching the satellite. It might take some time to find a customer. That means we are losing valuation time.
  5. Our satellite will be geostationary in Indonesia. That means that region will have better coverage and better suited for Indonesia, Philippines, Malaysia and nearby areas. However, finding customer in that region might be hard as Malaysia and nearby countries has their own satellite. Furthermore,  TV channels, telephone network providers are already has long term contract with existing satellite service providers. Furthermore, TV networks, ISPs & Telephone network providers of our country are also have long term contractual relation with current service providers. Hence, they will also not be shifting to BS-1 very soon.

So overall, Bangladesh might not be that much benefited from Bangabandhu 1 Satellite compared to the benefit claimed by the government. To me, it seems government merely launched to satellite to showcase this as an achievement as part of their commitment of ‘Digital Bangladesh’. However, government were not prepared enough to maintain the satellite. Furthermore, there were no well established strategy formulated to get best use of the satellite. Eventually it might be ended up being a loss making project for Bangladesh. Nevertheless, it will be a remarkable step for Bangladesh and will inspire to launch our next satellite. As this is the first time for Bangladesh, there might be lack of experience. However, after this we will have the experience necessary to manage and get best benefit out any satellite. So lets cut our government some slacks for this time for our country’s sake.

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