Hispasat is one of the world’s top 10 satellite operators and, under the ownership of Abertis, aspires to graduate to the top five. The Spanish company’s CEO Carlos Espinós speaks to SatelliteFinance Assistant Editor Guy Ferneyhough about Hispasat’s growth plans and calms fears of supply outstripping demand in the Latin American market.
Hispasat is one of the world’s top 10 satellite operators and, under the ownership of Abertis, aspires to graduate to the top five. The Spanish company’s CEO Carlos Espinós speaks to SatelliteFinance Assistant Editor Guy Ferneyhough about Hispasat’s growth plans and calms fears of supply outstripping demand in the Latin American market.
Guy Ferneyhough: What are Hispasat’s main strategic objectives for 2016?
Carlos Espinós: The main strategic objective is to improve our efficiency and increase our size, and converge markets and services. Hispasat’s medium and long term objectives are to continue to grow with the goal of strengthening our positions in our strongest markets, the Iberian Peninsula and Latin America, as well to increase our presence in other markets such as North Africa.
In Latin America we want to maintain the progress we’ve made in recent years in Mexico and the Andean countries, and to strengthen our position in Central America and the Caribbean. We are also interested in entering new markets that have a strong potential for growth as possibilities arise.
The company is currently among the top 10 satellite operators in the world and aspires to become one of the top five. To do so we have initiated a plan for organic growth that has already allowed us to go from two to six orbital positions by obtaining new rights, as we have already done this at 36W and 74W. We have also formed partnerships with other operators that allow us to optimise the use of orbital resources. In this way we can increase our global presence, offer clients a wider coverage area, and reach new markets.
Thanks to the rapid increase in investment since 2012, we will be able to double our satellite fleet, going from five to 10 in just five years. Two of these satellites are already in orbit, Amazonas 3 and Amazonas 4a, and we have another three satellites being built – Hispasat AG1, Hispasat 1F, and Amazonas 5 – which will be launched in 2016 and 2017.
Our second strategic objective is to consolidate 61W, where the Amazonas fleet are located, as a leading position for broadcasting distribution in Latin America, both for the DTH market and other audio-visual services.
In 2018 we predict 7.5 million homes in Latin America will have an antenna pointed at our satellites at 61W, which would make us the third most popular orbital position in the region in terms of the number of antennas, only behind the services operated by the American DTH giant DirecTV in Brazil and Mexico.
A third objective is to consolidate the satellite infrastructure as an extension of terrestrial networks. We think that the future will be based in hybrid networks and that satellites can supplement that in areas fibre cannot cover. Satellite is the best solution to solve the digital divide.
GF: In 2014 you were in talks to buy Spacecom, but they later broke down. Are there any plans to take another look at acquiring that asset?
CE: We are always open to analyse any operation that may arise, provided that the conditions are adequate.
Hispasat is willing to assess possible merger opportunities with other operators that may arise and would add value to the company.
GF: It has been argued by Euroconsult that FSS operators are in a period of transition as they are having to adapt to lower price points, due to both the influx of HTS capacity and the shift in demand from legacy premium markets to the higher growth but less lucrative emerging markets. Is this an analysis you agree with?
CE: In general this analysis may be considered valid, but I would like to add some clarifications. At Hispasat what we see is that Latin America continues to grow and, although we might expect some degree of price pressure, our prices have been steadily increasing over the last few years.
We believe that increasing demand is strong enough to absorb this effect and in the end lead to a global increase. We know, considering the high demand for DTH platforms, the overall effect is positive and we find we are able to serve HTS capacity without affecting growth in the Ku band or C band.
GF: Is Latin America where you see the most potential for growth? Is there still potential for growth in Europe?
CE: It is estimated that the greatest growth in satellite demand will be in Asia and sub-Saharan Africa, where there is still very much to do in terms of telecommunications infrastructure. The growth in these areas could increase to over 3%, possibly even 4%, however, we also foresee consistent growth of approximately 2.5% in Latin America and over 1% in North Africa – our natural geographic areas.
In Europe the C and Ku bands are not going to grow, this is clear, but the Ka band will. The Ka band offers the possibility to provide satellite broadband to areas where terrestrial networks don’t reach.
It may be the solution to meet the European Commission’s Digital Agenda for Europe which calls for all citizens to be provided with broadband services of at least 30 Mbps by 2020. This objective is currently impossible to reach without the possibility of using satellite as a complement to terrestrial networks, which cannot reach 100% of the population.
GF: What are your thoughts about capacity in Latin America? A lot of capacity is due to come online soon, and it seems like it is increasing faster than demand.
CE: It is true that in the next two to three years more capacity is expected to reach the market, and it is possible that just after these launches the fill rate may be slightly lower in this period, but in the medium term we think that the demand is solid.
This is a fact shown by many studies and by our experience in the region, where we continue to grow in all markets, in video, corporate networks and governmental use. We are paying a lot of attention to the evolution of the market.
GF: What new geographic markets are you targeting specifically?
CE: We don’t have a presence in all the countries that are in Central America and the Caribbean. We are now trying to open new opportunities in those markets, such as Puerto Rico, Cuba and the Dominican Republic. There are also other countries we are analysing.
We have also just started a new opportunity in Morocco, in North Africa, and we will increase our resources in these areas to increase our possibilities there.
GF: A big part of your capacity is used for DTH television. Are you concerned that consumers are moving towards OTT for their video services and away from satellite?
CE: I don’t see this trend as an imminent danger. Satellite continues to be the most efficient technology for broadcasting content and is still unbeatable as the preferred technology for users. We have to remember that in Europe 90 million homes watch satellite television, this is 35% of the total amount compared to 27% of for cable and only 11% of internet television.
In Latin America DTH TV satellite platforms continue to grow at a faster rate than cable TV which it surpassed in 2014. Even in countries where we see greater growth in video on demand services such as the US, linear TV consumption has barely changed and is still very high.
GF: Traditionally in-flight broadband has been the preserve of MSS operators, but some FSS players are now moving into this market – is this an interesting area for Hispasat?
CE: In general terms satellite broadband is a very interesting market for Hispasat. For this reason almost all our satellites launched or built since 2013 have had high throughput capacity. In developing countries where terrestrial networks are less extensive, as well as here in Europe where the commitment for the 2020 agenda requires that a service of 30Mbps be provided for 100% of the population, it is a necessity to use satellites to provide access to the internet.
Specifically regarding the mobility sector, there is a great potential for growth. In fact, Hispasat is the leading provider for solutions for high-speed trains, and we are also working for solutions for the maritime business area.
There are some differences in terms of the technology and the antenna used for in-flight broadband, but if we are able to partner to offer aeronautical solutions we will do it.
GF: Has the direction of Hispasat changed following Abertis taking control in 2012? Are they a hands-on owner?
CE: Abertis had already been a shareholder of Hispasat for several years before becoming a majority shareholder, and therefore they were well aware of the company’s objectives and direction and were involved in the decisions that have helped shape this project.
Since taking control, Abertis has only strengthened Hispasat’s ambition to become a bigger player, supporting its plans for growth and providing management experience and financial strength.
Since becoming the main shareholder, the level of coordination between Hispasat and Abertis has increased. They are aware of all our initiatives and we share all our new projects with them. They are devoted to Hispasat, not only with economic resources, but with human resources trying to understand and support us in all our initiatives.
GF: Are you looking at all-electric satellites? Is the trade-off – that they are cheaper to launch but take longer to get to orbit – worth it?
CE: They are a very interesting initiative and we are considering them, mainly because the all-electric solutions can significantly reduce the cost of the launch. This balance is especially positive when it comes to replacing a satellite. In these cases you know in advance when you need to put the capacity into orbit which allows for the necessary time it takes to the satellite to get to the geostationary orbit with electrical propulsion.
For these specific cases we think all-electric satellites could bring an important value to the company because you are able to decrease the price of the launcher.
GF: Are there any other trends in satellites you find exciting?
CE: The main new trend we are following is ultra high definition television formats. We are involved in different initiatives trying to promote the use of different codification strategies and technologies to make ultra high-definition formats much more widely available to our users. Additionally, we have been promoting the use of this initiative, we have one channel for Europe and another new channel for America available for the industry, where they may broadcast in ultra high definition formats in such a way that makes it much more available to test the new formats and new codifications.
(Photo credit: Ana Nance)
