Gulf News - Abu Dhabi satellite firm Yahsat’s generous dividends and reach make for an investment play

Vijay Valecha, Special to Gulf News November 24, 2021

Yahsat, a Dh6.90 billion market cap company, is into satellite services and owns five satellites. It owns Thuraya, which delivers GSM roaming capabilities and covers more than two-thirds of the world’s population.

Its core business lines are leasing satellite communication capacity, end-to-end integrated satellite communication, and providing fixed and mobile telecommunication services via satellites. Yahsat’s five satellites expedite vital communications such as the internet, television, backhauling, and mobility solutions. There is also a deal with Mubadala Petroleum to explore satellite service connectivity throughout the latter’s Southeast Asian portfolio. This collaboration cements Yahsat’s position as a preferred provider of satellite communication technology and key infrastructure to a variety of industries in MENA and Asia markets.

Benign dividend policy

Yahsat has implemented a change in the Group’s present dividend policy, allowing it to disburse dividends semi-annually. All shareholders will receive a final dividend of Dh192.8 million ($52.5 million) for 2021 in April next, and bringing the total payout for the year to Dh385.6 million.

This is anticipated to increase by at least 2 per cent every year, demonstrating that the firm is making significant efforts to build shareholder value by providing sustainable dividend growth.

Recently, Yahsat marked a milestone by announcing its inclusion in the FTSE UAE Small Cap Index and three MSCI indices just five months after the IPO. The inclusion is expected to improve its attractiveness to potential international investors and help to further diversify the investor base.

More deals emerge

The satellite company’s expansion plans continue with Thuraya Telecommunications Co. signing a long-term deal with Cobham Satcom, a Danish company, to provide next-generation broadband solutions for land, air and sea users. The deal is estimated to bring in more than $80 million in potential service income for Thuraya, which will enable Yahsat to strengthen profit margins. Cobham’s unique strengths and experience will be leveraged by Yahsat, enhancing the shared value the firm can give to distribution partners and end customers.

The company’s revenues marginally declined to Dh284 million from Dh293 million for the first nine months. Nevertheless, this should not be a source of concern as it is still emerging from the shocks of the pandemic. The UAE with Dh237 million and Europe with Dh17.60 million are the most significant contributors to the revenue. Globally, the use of satellite communication for IoT (Internet of Things) and disaster management in developed regions is expected to grow at a fast pace. Yahyasat will benefit from innovation and expansion in this space.