Questions and Answers
August, 1998
1. Has APSTAR-I experienced any interference recently? If yes, how did
this impact the services and revenue of APT Satellite?
As a customer-oriented satellite service provider, APT Satellite always has a set of comprehensive contingency
plans in place to deal with all unpredictable circumstances, even though such conditions rarely arise.
In March this year, there was interference by an earth station on a small frequency range of one of the transponders
of APSTAR-I. The problem was nothing to do with the satellite itself, and less than 1% of the total transponder
capacity of the satellite was affected. Immediately, APT Satellite worked with its customers to rectify the problem
by adjusting the frequency, and customer service was resumed shortly.
In fact, the interference has already subsided in July.
2. How has the regional economic slowdown affected APT Satellite’s revenue
in 1998?
We believe the regional economic slowdown has definitely affected all corporations to varying extents. Certainly,
the unfavorable business environment has made it more difficult for APT Satellite to increase the take-up rate
of APSTAR-IIR. However, current conditions have also discouraged new entrants, thereby improving the supply and
demand situation.
As we understand, the supply of satellite transponders will be reduced by at least 100 units due to postponement
and cancellation of several scheduled satellite launches this year. On the demand side, an unofficial research
report indicates the demand for satellite transponders will increase to over 2,000 units by the end of Year 2000
from currently about 1,500 units. The increase in demand is to a large extent due to telecommunications development
in the PRC. We believe APT Satellite will benefit from such a situation which will further strengthen our leading
position in the market.
3. What is the current utilisation of APSTAR-IIR?
Difficulties experienced in other industries have seen corporations adopt both tighter cost controls and more intense
scrutiny to planned expenditures. The current take up of APSTAR-IIR is about 25% of capacity which is slower than
expected, but we believe the utilisation will increase to 40% or more by the end of this year due to the improved
supply and demand picture as outlined previously.
4. What is the progress of the DBS (Direct Broadcasting Satellite) project?
APT Satellite has been very aggressive in pursuing the launch of DBS and we feel positive about the progress of
our negotiations with related government entities in the PRC.
5. Will the PRC satellite industry become more regulated after the formation
of the Ministry of Information Industry? How will that impact APT Satellite?
The key point that must be emphasized is that the satellite industry itself presents strong natural barriers to
new entrants. Furthermore, such barriers are even stronger in the PRC. In addition to requirements such as a high
level of capital, specific knowledge and access to technology, the strong backing of related government entities
is critical to the success of a satellite service provider in the PRC.
Overall, APT Satellite is well positioned to capture the opportunities in the PRC market.
6. The increased supply of satellite transponders in the region has led
to a saturation of demand. Does this create downward pressure on APT Satellite’s lease rate for its existing and
prospective contracts? How does this affect the transponder utilisation of APT Satellite?
At present, we are not seeing significant pressure on our lease rate since most of our existing contracts are long-term,
ranging between five to ten years. As explained in previous questions, the improved supply and demand situation
will automatically ease the price pressures in the industry. In 1998, we will continue to focus on the PRC market
because it is one of the least affected countries by the Asian crisis. In fact the market contributed 53% of our
income in 1997.
7. When will there be an improvement in the supply and demand situation
in the region?
In light of the current volatile market conditions, it is hard to make any accurate predictions. However, we are
positive the situation will improve in the near term.
8. Has APT Satellite settled the dispute with other orbit users over the
use of orbital slot at 76.5 degree East for its APSTAR-IIR satellite?
APT has obtained a priority position in the ITU filing process for the use of the orbital slot located at 76.5
degrees East and is in the process of completing frequency coordination for this slot. The Company has filed to
the ITU to upgrade its status from the coordination stage to the final stage and is still awaiting the final result.
9. Does APT Satellite plan to secure additional orbital slots for its
future development?
Yes. The PRC government, on behalf of APT, has applied for a number of additional orbital slots. In addition to
the orbital slot located at 76.5 degrees East, in which APSTAR IIR is place, the Company has applications outstanding
for orbital slots at 131, 93, 85.5 and 89.5 degrees East.
10. Does APT Satellite agree that its APSTAR satellites deliver a poorer
transmission due to the unfavourable elevation angles of the ground stations?
We are satisfied with the performance of all our satellites and such confidence is repeatedly reinforced by feedback
from customers. At present, coverage of our three satellites extends over 100 countries located in Asia, Europe,
Africa and Australia, servicing about 75% of the world’s population. APT’s customers or end users can receive APSTAR’s
signal at reasonably good elevation angles.
11. How will APT Satellite handle the Year 2000 problem?
The Company is concerned about the possibility of the Year 2000 problem affecting its computer-based systems. Our
specialist staff have conducted a comprehensive impact analysis of the areas which may possibly be affected by
the problem. The analysis included three main areas, as follows:
(a) Satellites
Since all the important operation parameters of APSTAR I, APSTAR 1A and APSTAR IIR are not related to or based
on calendar years, the problem is unlikely to have any material impact on the APSTAR System.
(b) Satellite Control Centre
The important computer software currently used in the Centre (like software for Telemetry, Tracking and Control
of the APSTAR System) and related data processing are also not related to or based on calendar years. We believe
other minor or discrete application software which may be affected by the problem will be rectified by the Group’s
staff or the vendors concerned by the end of 1998.
(c) Office Automation
There is no important or critical data processing of computer files in any department or operation function of
the Company which is related to or based on calendar years. Again, We believe other minor or discrete application
software which may be affected by the problem will be rectified by the Group’s staff or the vendors concerned by
the end of 1998. Overall, the Company does not believe the problem will have any material adverse effect on its
daily operations or result in any material expenditures to address the problem.
