Imagine joining a company as CEO and finding out you had six months to find $13 million a to make large debt payments or the company would face potential financial meltdown. Add to that, tough economic conditions, a demotivated workforce and declining revenues (CAGR of -7.9 percent between 2008 and 2010) and you have a recipe for disaster. This is the exact scenario Samer Halawi faced when he became the CEO of Thuraya in January 2011. With his job on the line straight away, Thuraya needed quick action if it was to get out of a sticky situation.
Finding out about the company’s dire financial situation “was a big surprise” admits Halawi as he set about the task of restoring Thuraya’s fortunes that January. He admits that the company could have come very close to going under. He decided to tackle the problems head on. The week before he joined, he went to see every major distributor the company had. In his second day in the role, Halawi was seeing shareholders. So, by the first week, he had seen every major distributor, all the members of the executive team and the shareholders. It was a fast moving situation. Solving the financial black hole was the initial major challenge facing the company with very limited cash in the business. However, Halawi could also see that there were a lot of areas that could be trimmed and a lot of areas that needed investment. It was a frantic time for all of those involved.
“We had to tackle the issues of the balance sheet. It needed total refurbishment. We had debt that did not make sense and needed to be restructured. It was too short term. Of course, to restructure debt, the banks needed to understand the business model, the vision and where Thuraya was going, and our plans to generate growth,” says Halawi. “We actually restructured our debt three times. The first time was just to deal with the situation at hand. The second was to improve the pricing and maturity. And the third one was to improve another part of our debt. We had three debt restructures in three years. We have turned our balance sheet completely upside down, and today, our cashflow has risen to a healthy position and we are now the least leveraged MSS operator.”
It was a baptism by fire for Halawi. There were numerous events happening at that time including the Arab Spring and the jamming of a Thuraya satellite by Libyan authorities. There was also a lack of awareness about the company, as well as dealing with disgruntled distributors. Employees were leaving the company; it was chaos.
“It did feel like you were jumping in at the deep end but, that was the challenge,” admits Halawi.
It is a mark of Halawi and his team’s success that Thuraya has seen such a dramatic turnaround. Since 2011 revenues have consecutively increased at a CAGR of 10.9 percent from 2011 to 2014.
Back in 2011, Thuraya had a limited portfolio of products. The company would have to dramatically change this part of its business as well. Halawi says one of the key factors was exploring the potentially lucrative revenues that could be derived from the maritime, government and telecoms sectors.
Our network at that point in time had not seen any investment for over five years. We had a lot of equipment that was obsolete and needed refurbishment. We put in place an aggressive network upgrade plan to address that.
— Samer Halawi, Thuraya
“Our network at that point in time had not seen any investment for over five years. We had a lot of equipment that was obsolete and needed refurbishment. We put in place an aggressive network upgrade plan to address that. We also had to work with vendors to bring in new products. All of this had to be done under a different mentality and with a lot of creativity in order to find the funds needed for all the upgrades and product introductions,” says Halawi.
Transformation Well Underway
The company has seen a high turnover of people since the start of its transformation. First, a new culture that people could embrace and believe in had to be established, Halawi says. “Once you do that, the whole vision of the company starts to change.” Thuraya has aggressively recruited new talent and estimates that half the staff has joined in the last three years. Secondly, the company diversified its hiring criteria to bring in people with new and different skill sets to develop new markets and products. For example, because Thuraya was going to target the U.S. government market, it needed to bring fresh talent with expertise it didn’t have. The transformation of Thuraya has taken three distinct phases. The first phase was about getting the company back on the right track. The second phase was using its current assets to grow the company over the next few years. The third phase is about building a business that would sustain over the long run.
“This means looking at next generation capability and what we need to have in place by 2020. So, how do we do that, and do that in a way that is not reactive, unlike some of our competitors. We need to keep in mind the failures the satellite industry has had since the late 1990s. We don’t want to build a service which, by the time it is running, it is already obsolete. Instead, we are looking for a disruptive forward-looking network that caters to the needs of customers in the future,” says Halawi.
One of the big questions facing Thuraya is where it goes next with its next constellation of satellites. With its MSS rivals all launching new, high-powered satellites in recent times, the world is watching to see what Thuraya might do next. Halawi remains calm and coy on the subject. He admits it could be a LEO satellite system with many satellites, or that it could even be a GEO system with one to three satellites. He says Thuraya is talking to the manufacturers to see what makes sense.
“The capability we are looking for will have to be mobile. It has to cater to the different markets that we have discussed as well as the whole concept of Bring Your Own Device (BYOD) that we have been pioneering. People want more and more bandwidth,” says Halawi. “We don’t have a defined idea yet. If there is no technology that can support what we are looking for, we might opt for a different route. We have alternatives that we are exploring. I think by the end of this year, we should have a defined plan that could be announced to the industry. It should help us secure funding to start acquiring satellites. However, we have a long way until we get there.” And he is confident in Thuraya’s ability gain funding for its new constellation.
Halawi has made a number of key appointments since coming on board, in distribution, government services and also innovation. One of his key appointments in September 2013 was a vice president of innovation, who is charged with pioneering Thuraya’s future product portfolio. Randy Roberts believes there are a number of key new markets that the company can target, in addition to its core markets of government, maritime, energy, media, and telecoms. One good example is the “connected car” market and its various segments, which Thuraya highlights as a potentially good market for the company in the future.
“We have done a lot of research on new markets that we would like to tap into. We have research on 30 potential growth areas for the company; we then boiled it down to six. Of the six, I would say “connected car” is a significant opportunity,” adds Roberts. He also highlights a number of other opportunities for the company such as mobile hot spots and the Internet of Things (IoT).
The company has been one of satellite’s turnaround stories over the last few years. In terms of where it the company would like to be in two or three years time, Halawi says Thuraya should be able to launch its next generation constellation in this timeframe.
“We want to be recognized as a leader in mobile satellite services that provides services which are unique and new to the industry. Thuraya will be an innovative company with happy employees. If there is a legacy I’d like to leave behind, it is for my staff to say that Thuraya is the best place they have worked in,” he says. VS
Mark Holmes is the editorial director for Via Satellite and Avionics Magazine.