Healthy Demand Strengthens Latin American Telecom Market

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WASHINGTON — The market for satellite services in Latin America has remained surprisingly strong throughout the global economic downturn as consumers drive up demand for satellite television and governments continue to roll out universal-service projects to deliver connectivity to rural areas, satellite operators in the region said here March 17.

Speaking at the Satellite 2010 conference, these operators said near-term prospects appear good despite the fact that a half-dozen new satellite projects have been announced in addition to the new spacecraft arriving for the established fleet operators. Argentina, Bolivia, Colombia and the Andean Community all are planning telecommunications satellites.

Venezuela’s Venesat-1, which was launched in late 2008, remains a wild card insofar as the satellite has a large capacity but its owners have not attacked the regional market. “I call it the ‘mystery satellite,’” said Carmen Gonzalez-Sanfeliu, vice president for Latin America at Intelsat of Luxembourg and Washington. “No one has been able to find out what is going on. We are all surprised by what has happened in the region in the last 18 months. There was an oversupply. But not everyone can launch a $300 million satellite system and do it well in terms of market approach. That’s the good news.”

The world’s biggest satellite fleet operators are all active in Latin America— Intelsat, SES of Luxembourg, and Eutelsat of Paris, through its investment in Spain’s Hispasat and Telesat of Canada. SES, through its Quetz-Sat venture with EchoStar of Englewood, Colo., and Mexican partners, plans to launch the QuetzSat-1 satellite in 2011.

Telesat has been investigating whether to invest in the Colombian satellite project. Hispasat’s Amazonas-2 satellite — with 52 Ku- and 10 C-band transponders — was launched in October and declared operational earlier this year.

“It is true that some of these planned satellites may take regional demand, but we have seen no decrease in demand recently,” said Dolores Martos, vice president for Latin America at SES New Skies, the SES division handling the Americas. “It may be reserved for military applications, and that would account for why we have not seen a market reaction.”

The dramatic turnaround in the market for satellite television is one reason for the market’s current strength. DirecTV’s Latin American service and the newer Dish Mexico service with EchoStar both are reporting subscriber additions that seem little affected by the broader financial crisis. Martos said SES World Skies’ NSS-6 satellite now carries 170 television channels for Latin America, up from 110 in 2004.

Mauro Wajnberg, chief marketing officer at Star One S.A. of Brazil, said the company has more than 16 million subscribers whose dishes are pointed toward Star One’s 70 degrees west orbital slot.

Wajnberg said that Star One, which has hesitated in its satellite fleet expansion after the launch of Star One C1 and Star One C2, plans a Star One C3 spacecraft for launch in 2012.

In addition to television viewers, Star One has benefited from the Gesac project by the Brazilian government to extend connectivity to areas not on the terrestrial grid. Nearly 12,000 rural satellite sites are linked to the Star One C1 satellite. Colombia is implementing a similar project.

“Satellite demand has not been affected — at least not for us,” by the global economic turmoil in the past two years, Wajnberg said.

Miguel Angel Redondo, commercial director of Hispasat of Spain, said his company’s big investment in Latin America — the company in two years will have doubled the number of transponders available in Latin America compared with 2007 — is not necessarily over.

Hispasat had expressed interest in purchasing Satmex of Mexico before abandoning the idea when Englewood, Colo.-based EchoStar’s offer won the backing of Satmex’s management. The EchoStar bid was rejected by Satmex debt-holders, leaving Satmex without a clear strategy for survival. Redondo said Hispasat would not rule out taking a fresh look at Satmex, but that “the situation with that company, and its relations with the government of Mexico, is complicated.”

Rome-based Telespazio, a satellite services provider, is seeing growth in Latin America particularly in the cellular-backhaul market, a growing satellite business worldwide in which the cellular signal is carried between remote locations and terrestrial nodes.

“Our business has grown by 50 percent in the last couple of years,” said Marzio Laurenti, chief executive of Telespazio Brasil S.A. “In just the last year we were able to fill five [satellite] transponders because of GSM backhaul demand.”