The price war among commercial satellite operators in Latin America has brought transponder-lease contracts down to barely profitable levels and is likely to continue through 2005 but then ease starting in 2006, according to Aon Explorer, the France-based division of insurance brokerage Aon Corp. of Chicago.
Aon said that in 2004, PanAmSat Corp. of Wilton, Conn., had a 28 percent share of Latin America’s $546 million satellite services market, followed by Star One of Brazil, with 23 percent. Washington-based Intelsat had a 19 percent market share, Mexico’s Satmex had 14 percent and New Skies Satellites of The Netherlands, 8 percent.
Nahuelsat of Argentina and Hispasat S.A. of Spain were credited with having 3 percent and 2 percent of the market, respectively. All other operators — Eutelsat S.A. of Paris, Loral Skynet of New York, SES Americom of New Jersey, Telesat Canada and the Russian Satellite Communications Co. aligned with Intersputnik — had the remaining 3 percent of the market.
Latin America is, with Eastern Asia, among the world’s most competitive satellite-services markets despite the fact that several large satellites slated to cover the region have been delayed or faced other problems. Loral’s Estrela do Sul satellite is operating but without a substantial portion of its capacity following an on-board component failure. It is now mainly used to provide trans-Atlantic communications for the Connexion by Boeing broadband-to-aircraft service.
Meanwhile , the completed Satmex 6 satellite remains stalled on the ground because its owner, Satmex, is having financial problems .
But Star One is building two new satellites for the region, in part to replace aging spacecraft; Argentina is considering a new national satellite system; and SES Global of Luxembourg has taken a 40-plus percent stake in a new Mexican satellite operator, called QuetzSat.
QuetzSat, whose principal shareholder is Mexican media conglomerate Grupo Medcom — Medcom Chairman Clemente Serna also is chairman of QuetzSat — won an auction to fill Mexico’s 77 degrees west longitude orbital slot to serve direct-to-home satellite customers in Mexico, Central America and the eastern United States. QuetzSat will become the 11th satellite operator competing for Latin American business. Its first satellite is scheduled to be in place later this year.
Intelsat’s IA-8 satellite, now scheduled for launch by a Sea Launch rocket by mid-year, also will add capacity for Latin America.
Erwin Mercado, Intelsat regional vice president for Latin America, said 10 satellites fully devoted to Latin America are now in orbit, with five others partially serving the region. Mercado said the growth in the market will be for Ku-band broadband connections.
For Aon, the five-year slide in average transponder-lease contract values appeared to touch bottom in 2004 and even rose slightly, to $1.18 million, by year’s end. In 1998, the average one-year lease price for 36 megahertz of transponder capacity was nearly $1.5 million per year.
The average price is a blend of the still-favored C-band transponder market and the struggling Ku-band market. C-band capacity represents three-quarters of all commercial satellite demand in Latin America despite the launch in the late 1990s of substantial Ku-band transponder capacity by operators anticipating quicker market uptake.
Aon forecasts that by 2014, C-band will still have a 66 percent market share, with Ku-band making inroads as Latin American governments pursue programs for rural broadband and telephone services.
The fill rate for all commercial telecommunications satellites serving the region was less than 60 percent at the end of 2004, according to Aon Explorer. For Ku-band capacity, that rate was just 40 percent.
Aon’s analysis, “Prospects for Satellite Services in the Latin American Telecom and TV Markets,” is generally consistent with reports from individual operators active in the region.
The company estimates that satellite operators’ Latin American revenues will grow by 3.4 percent annually in the next 10 years.
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