Executive Spotlight Interview with Igor Kot, Deputy Secretary-General Gazprom Space Systems

Igor Kot, Deputy Secretary-General of Russia-based satellite operator Gazprom Space Systems, shares his insights on how their company has weathered the global pandemic and their plans moving forward as they celebrate their company's 30th anniversary in 2022. 

How has the global COVID pandemic affected your business and how did you cope as a company to the challenges?

Igor Kot

Since 2020, the situation in the satellite telecommunication industry, as in the entire global economy, has become more complicated due toCovid-19. According to quarterly reports provided on satellite operators’ websites, the majority of publicly listed operators stated a continuing decrease in revenues for the three quarters of 2021. Prior to the crisis, forecasts of the leading analytical companies (such as Euroconsult and NSR) assumed in 2020 a return to growth in total industry revenue, which has been declining since 2015. But due to the impact of Covid-19, this return to growth is now being delayed until at least 2022. The impact of Covid-19 varies significantly depending on the vertical of the satellite communications market. Mobility segment suffered the most – air and maritime connectivity, where the consumption of satellite services decreased dramatically. Other data applications, such as consumer broadband and cellular backhaul, have suffered less and are expected to see a gradual increase in capacity demand with 12-18 month delay over previous forecasts. 

The market crisis phenomena has made its own adjustments to the business activities of Gazprom Space Systems (GSS). During the pandemic, some areas of the satellite business have been undergoing serious changes, satellite capacity fill rates and amount of services have decreased, thus it made difficult to maintain stable the monthly proceeds from preliminary contracted satellite capacity and services still being valid in 2020-21. Therefore, in order to cope the challenges and make up for such gaps, GSS maintains the required volume of income by attracting new customers. In addition, the company had to improve the operational efficiency and reduce some costs. This enabled GSS not just to maintain the appropriate level, but to demonstrate revenue growth for the last two years. 

How you see your company moving forward post-pandemic?

The efforts mentioned above helped to balance the business in this unstable environment for a while. Obviously, it is not enough over the long run. Operators are seeking their own business recipe, but in general the approaches are very similar. Firstly, all satellite operators endeavor to make the most of the capacity on existing orbital assets (basically traditional communication satellites with wide coverage areas, in C- and Ku-bands), where they had had solid investments. The decline in market prices for satellite capacity forces many fleet operators to strengthen vertical integration and develop managed services combining the lease of satellite capacity, teleport services, ground segment equipment support, etc. This approach reduces the risks of falling into the so-called “raw capacity trap". Some players say they are trying to get rid of the silo mentality existing among satellite operators and not positioning themselves as some independent unit, but act as partners to large telcos and cooperate more actively with terrestrial networks. Increasing customer focus, building partnerships, as well as developing projects of capacity sharing with terrestrial wireless network operators – a set of options GSS will continue to leverage for further development. In addition, the company is going to extend its Ka-band business by complementing Yamal-601 coverage with new HTS satellite Yamal-502 designated to increase services provision in such applications as broadband, IFC, Maritime, etc.      

What are your key targets for the company in 2022?

There are several high-profile events in GSS’ agenda for the next year. In terms of existing GEO satellite fleet development, GSS is going to step up to the investment phase of the Yamal-501 project on its way of Yamal-402 scheduled replacement. As for Earth Observation (EO)  business, GSS will continue the development of aerospace monitoring system-SMOTR. The system will allow solving a wide range of industrial and environmental problems as well as provide monitoring of infrastructure facilities, in particular including enterprises of Oil & Gas sector. In addition, we will be completing the construction of the first in Russia,  Assembly, Integration and Test Facility (Gazprom AIT). 

What else can we expect from Gazprom Space Systems in the coming months?

In 2022 GSS is going to celebrate its 30th anniversary. Thirty is fairly a considerable and conscious age, when the company has a huge experience in successful projects implementation behind and still has a strong appetite to evolve notwithstanding the challenging economic situation. Being a long-running player in satellite industry GSS will continue activities towards cooperation and partnerships for the benefit of the global space economy on its road to post-pandemic recovery.