US satellite broadcaster DirecTV’s South American subsidiary, DirecTV Latin America, is on the verge of ordering a new satellite dedicated to serving the fast growing Brazilian DTH market.
Speaking at the Morgan Stanley Technology, Media & Telecom…
US satellite broadcaster DirecTV’s South American subsidiary, DirecTV Latin America, is on the verge of ordering a new satellite dedicated to serving the fast growing Brazilian DTH market.
Speaking at the Morgan Stanley Technology, Media & Telecom Conference, Bruce Churchill, EVP and CEO of DIRECTV Latin America said; “We’re building three satellites. We’ve actually got two satellites in the process of being built for our PanAmericana platform, which I think we announced a couple of years ago. And I believe we are genuinely very close to getting a deal done for a new satellite for Brazil.
“And that satellite is all about adding additional capacity, particularly as HD becomes more popular in Latin America as it has in the rest of the world. It is the need for more capacity to deliver, frankly, the same number of channels, as well as for additional growth.”
DirecTV Latin America has grown rapidly over the past couple of years, ending 2012 with approximately 10 millions subscribers on a consolidated basis and over US$6bn in revenue for the year, up around 20% year-on-year.
While its PanAmericana business, comprising its operations in Argentina, Venezuela, Colombia, Chile and Peru, continues to gain scale, it is Sky Brasil that has driven this growth and Churchill was bullish about its future prospects.
“Brazil is the biggest market – it has 60 million homes. Pay-TV penetration is still very low in Brazil, among the lowest in the region, at about 27% at the end of last year. But that has gone up from probably 21% a year ago. So it was a good 5 percentage points increase in penetration in the market in just a year. That’s pretty significant growth.”
As well as ordering new satellites, DirecTV Latin America is to use a large proportion of the US$2bn of cap-ex it has assigned for 2013 on both customer acquisition and increasing overall ARPU.
To that end, Churchill said, “In Brazil, where we’ve had quite a lot of success upgrading people to HD. So maybe they’ve been in a standard-def package for a while, we upgrade them into an HD box, and they keep the second box for the second TV and we give them a new box. We now have almost 1.5 million HD subscribers in Brazil.”
EchoStar hopes to join the fray
DirecTV Latin America already faces a number of rivals in the Brazilian pay-TV market, America Movil’s cable operations, Spanish telecom giant Telefonica and Vivendi-owned GVT, which DirecTV has already expressed an interest in bidding for. However, it could now be set for another with US satellite operator EchoStar suggesting that it might be finally close to launching a service in Brazil.
Speaking on EchoStar’s full year 2012 results conference call, CEO and president Michael Dugan commented: “We are continuing our discussions with potential partners in Brazil to provide a DTH service. The process is taking much longer than we would have liked, but efforts continue. We continue to believe Brazil presents a significant opportunity in the satellite pay-TV and broadband market.”
In response to an analyst question as to why it has taken so long, Dugan said: “Well, I can only say that internally that we are working very, very hard to come up with a business plan and a return on investment that makes sense. We’re obviously, working to get something done this year but it’s complex. With international markets, everything from the currencies to the people in control are changing on us. So I can’t tell you for sure one way or the other but I know we want to get it done.”
Back in August 2011, EchoStar’s subsidiary Hughes Network Systems won an auction to operate a satellite in the Ku and Ka-bands at 45W. Since then local reports have claimed that EchoStar has held talks with the likes of Telefonica Brasil and Oi about creating a DTH joint venture in the country.
Even if it finally does succeed in launching a Brazilian DTH service, its rivals remain sceptical about its future success. When asked about EchoStar’s ongoing plans, Bruce Churchill said: “I have to say, the longer that they wait, I think the harder it gets. I think it would be difficult, at this stage of the game, to come in from a standing start. You really have to find a local partner. I don’t know who that would be.”
