Latin Amercian Satellite Market Maintains Fragile Recovery

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  Space News Business

Latin Amercian Satellite Market Maintains Fragile Recovery

By PETER B. de SELDING
Space News Staff Writer
posted: 13 February 2006
01:46 pm ET


Satellite operators serving Latin America said their region is entering its fourth year of recovery, with stabilizing transponder prices and the still-fragile hope that no additional satellite capacity will arrive to send prices into a downward spiral.

The joker in the equation could be the large telecommunications satellite that the Venezuelan government said it would order from China. How this spacecraft will be promoted in the region, if at all, remains unclear, officials said here Feb. 8 during the Satellite 2006 conference, organized by Access Intelligence.

“Nobody knows precisely what the satellite’s coverage will be, or what its characteristics are,” said Dolores Martos, vice president for Latin America at New Skies Satellites of The Hague, Netherlands. “We are trying to find out more about it, and it appears that it will be used mainly for Venezuelan government applications.”

Alejandro Macarron, commercial director for Hispasat S.A. of Spain, whose Amazonas satellite covers Latin America, said his company has been trying without success to secure landing rights in Venezuela. He said he suspects that Venezuelan authorities wish to preserve their domestic market for their own satellite.

Erwin Mercado, regional vice president for Latin America for Intelsat of Washington and Bermuda, said Venezuela’s plans should not be a worry for existing operators.

An official from one company active in selling satellite services in the region said there remain doubts about whether the Venezuelan satellite will even be built. “It’s saber-rattling by [Venezuelan President Hugo] Chavez,” this official said. “Venezuela is not going to spend $200 million on a satellite when its oil-refining sector needs to be upgraded. It’s just a way of saying to the U.S. government, ‘I’m here and I can do what I want.'”

The Latin American satellite services market hit bottom in 2003 when several governments suffered economic crises. Since then it has been climbing back toward profitability. But transponder prices remain low in general, even if selected applications have proved profitable for some satellite operators.

“Backhaul links for cellular telephone networks, government-sponsored rural broadband projects and voice over IP — these applications have done well,” Macarron said.

“People say there is too much capacity over Latin America, but you need to take a closer look,” said Mercado of Intelsat. “The year 2005 was extremely competitive but we managed to do well. There is Ku-band broadband growth, and cellular backhaul shows good growth. The good capacity in the region is taken.”

An estimated 14 satellites cover Latin America. Martos said the new satellites coming into service are mainly to replace existing capacity. “With continued economic growth in the region, we should see some slight growth in prices.”

Mauro Wajnberg, director of space segment business for satellite operator Star One SA of Brazil, said he remained cautious on predictions of any near-term growth.

“We are competing increasingly with global players that can sell capacity in this region for very, very low prices and can justify their practices because of the revenues they get from North America or Europe,” Wajnberg said. “We also pay many of our bills in dollars and generate revenues in local currencies. Prices are still going down, but by the end of the decade we should see a slight recovery.”

Comments: pdeselding@compuserve.com