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an exclusive video interview with Petra Mateos.
When appointed chairwoman of Hispasat in 2004, Petra Mateos felt the company needed to have more of an international focus and more diversified revenue streams. Mateos followed through on her plans, expanding Hispasat’s operations, geographic reach and profitability, and for her efforts, she has been named Via Satellite’s 2010 Satellite Executive of the Year.
When Mateos assumed leadership of Hispasat, the operator was barely profitable, posting earnings of about 12 million euros ($16.3 million) combined in 2004 and 2005. Fast forward six years, and Hispasat is on track to record a combined profit in 2009 and 2010 of around 140 million euros ($190.5 million).
Hispasat has been transformed into one of the most efficient FSS players around the globe by adhering to “an effective commitment to the development of the information society and to providing universal access to the communications services,” Mateos says. “To be specific, between 2004 and 2010, Hispasat experienced the highest growth in its history. Net income increased 32.5 times and revenues by 114.8 percent. Thanks to its efficient, effective and sustainable growth model for creating value and encouraging innovation, achieving the goals set in recent years has enabled Hispasat to become the seventh company in the world by revenue in its sector and the company ranks third for regional operators.”
The operator has flourished by focusing on Latin America and the Spanish- and Portuguese-speaking parts of Europe and now distributes more than 1,150 television and radio channels. Strong fill rates of Amazonas 1 and Amazonas 2 in Latin America vindicate Mateos’s strategy and bode well for future growth. Mateos spoke with Via Satellite Associate Editor Mark Holmes about how she turned Hispasat into a force to be reckoned with.
VIA SATELLITE: What have been the drivers of Hispasat’s growth?
Mateos: The key drivers of this growth have been: the strength of a successful project linked to the new management model implemented by the company along with a commercial policy that keeps it close to the growth plans of its clients. The implementation of policies of containment and rationalization of costs, through the improvement of budget monitoring systems and control, obtaining reasonable benefits from the resources used and high, sustainable and quality profit. We aim to encourage innovation, which is part of our corporate DNA, as well as a tool for competitiveness.
VIA SATELLITE: How will you sustain this growth?
Mateos: In 2006, Hispasat launched a growth and expansion plan in order to strengthen its business project. The plan contemplates the introduction of five new satellites to our fleet, with an investment of more than 1.28 billion euros ($1.74 billion). Completion of the projects included in the plan will double our capacity in orbit, strengthen Hispasat’s position in its target markets and open new growth, will have very positive effects on major economic-financial magnitudes, forecasting an average annual cumulative growth of more than 10 percent of revenue and 11 percent in EBITDA for the 2009-2017 period.
The amount of these investments will be financed by Hispasat without recurring to shareholders thanks to the cash flows generated by the group and new debt.
After the launch of Amazonas 2 in October 2009 and of Hispasat 1E in December 2010, the growth strategy included in the plan allows the modular and optimized growth of Hispasat’s capacity in line with demand forecasts through the launch of the Hispasat 2A satellite (2013), the replacement of Amazonas 1 through the Amazonas 3 satellite (2013), and the replacement of the 1C and 1D satellites by Hispasat 1F satellite at the end of the lifetime of 1C. With these new satellites, Hispasat has reinforced its role as a key operator for the advance of the aerospace and telecommunications industry in our country through programs which provide technological returns, both direct and indirect, that boost its growth and speed our international process.
VIA SATELLITE: How does a regional satellite operator look at the competition in the FSS market?
Mateos: Our focus is to remain close to our clients and to have the capability to accompany them in their growth. To that end, we have added a powerful and modern fleet of satellites with highly reliable technical specifications and a team of professionals capable of offering innovative and high-quality services. In Latin America, Hispasat offers the added value of serving as a communications bridge between the two continents, and our motto defines that role perfectly: “Acercando Culturas” or “Bringing Cultures Together.” We have confidence in the region for developing our projects on the other side of the Atlantic and from there, Hispasat has projected its growth on the American continent.
VIA SATELLITE: When you joined the company, the foundations for the Latin American strategy were in place. What was your long-term strategy?
Mateos: My main concern in 2004 was that the company needed to become international and diversified and to that end, we initiated an intense commercial activity. This effort allowed the company to improve its competitive position in regions with high-growth potential, such as Latin America, and to enter new markets, like the United States. Hispasat first started to make deeper inroads into the American market at the beginning of 2005 with the success of the commercialization of our first American satellite, Amazonas 1. Between 2005 and 2006, Hispasat managed to capture more than 75 percent of the net growth in demand in Latin America and, by its third year in orbit, Amazonas 1 reached a fill rate of more than 90 percent. This process, together with the high demand from current clients of the region, allowed Hispasat to expand its fleet with a new satellite, Amazonas 2, launched in October of 2009, which doubles our spatial capacity in the area and is the largest satellite with pan-American coverage. To strengthen this position, we are currently in the manufacturing process of a new satellite, Amazonas 3, which will be launched in 2013.
VIA SATELLITE: How has the Latin American market changed, and what impact has that had on your plans?
Mateos: The 61 degrees West orbital position, with the Amazonas 1 and the Amazonas 2 satellites, has become an international benchmark for the large DTH television platforms which operate on both sides of the Atlantic and that see in Hispasat an operator that is recognized not only for quality and for the technological value of its services but for the number of channels disseminated. This strategic position coincides with the demand in Latin America for products and services tied to the dissemination and broadcast of audiovisual content as well as broadband multimedia services that is forecast to continue in the years to come.
In addition, our Amazonas 1 and Amazonas 2 satellites carry the Amerhis system onboard, a multimedia processor for advanced, delay-sensitive broadband services that provides pioneer operation functions in the area of efficient and innovative telecommunications. In Latin America, Hispasat is already the third largest company by revenue in its sector. In this region, Hispasat guarantees a high-quality supply of space capacity for communications services, among which are the distribution and dissemination of audiovisual content, telecommunications networks — fixed and mobile — as well as broadband solutions in more than 10 of its main countries.
VIA SATELLITE: How did these contracts with some of your major partners in Latin America develop?
Mateos: Since January 2005, the date our first satellite with American coverage was put into service through Hispamar Satélites, the Brazilian company in which the Hispasat Group and Telemar Group (currently OI) have stakeholdings, we have demonstrated our continued, long-term commitment and, particularly, our interest in generating and strengthening bonds with the most significant Latin American business sectors. Hispasat, through the orbital position of 61 degrees West, which doubled in size just over a year ago when Amazonas 2 was launched, is taking a very active part in achieving the targets set by operators in the region in order to fulfill commitments for rolling out mobile telephony and broadband and Internet access solutions in remote areas with access difficulties. Through our satellites, large corporations, such as Petrobras, have interconnected their work centers, deep-sea oil rigs, offices, client service centers or operations centers spread around the country. We also transmit all the telephone trunk links, both for landlines and mobile phones, for Oi, which are sent from the Northeastern provinces of the country toward Rio de Janeiro. Furthermore, those satellites are been used for projects promoted by the central government to reduce the digital gap through universalization programs.
VIA SATELLITE: What is your broadband strategy?
Mateos: The launching of satellites with high performance multi-spot Ka-band is a trend in the strategy of satellite operators. The current dedicated Ka-band satellites are aimed at highly developed markets such as Europe and the United States. In Latin America, where infrastructures are less developed, the existence of a potential and growing market for the same Internet access services with the same level of quality as those offered in other regions seems logical. In this sense, for the first time, our next satellite, Amazonas 3, will offer a payload in Ka-band to the region for the provision of broadband services in the major metropolitan areas of Latin America.
VIA SATELLITE: Do you expect Latin America to become even more important as a revenue contributor?
Mateos: Yes. At the end of 2010, revenue from the Americas will represent more than 41 percent of our total revenue, and we expect that this level will reach approximately 50 percent in 2015. Regarding the mix by application revenues, telecommunications networks are still the most important in Latin America, with about 60 percent. Nevertheless, that percentage will fade in coming years for the benefit of video applications that are significantly increasing their use of space capacity in Amazonas 1 and 2.
For Hispasat, the United States is a priority. That makes sense. We are the leading satellite operator in Spanish and Portuguese and, in the United States, home to more than 44 million Latinos, we have high expectations for growth. With the Amazonas 1, we have extended our coverage to the entire continental United States. This same satellite, with a reduced size mobile antenna, allowed emergency communications in New Orleans to be re-established after Hurricane Katrina. With the commercial rollout of the Amazonas 2 satellite in 2010, Hispasat has reinforced its presence in the United States, a country to which an important part of its capacity is allocated. Hispasat has various teleports throughout the United States from which audiovisual content is distributed and major data networks are deployed.
I also want to mention the contribution Amazonas 2 makes to sustainability and climate change through projects such as those, developed recently by NASA for the study of hurricanes in the Atlantic and the Pacific regions, in which unmanned aerial vehicles are used along with Hispasat space capacity.
VIA SATELLITE: How do you see markets like Spain and Portugal developing for satellite services?
Mateos: The European market has developed considerably over the last few years, with new TV services associated to DTH platforms and with the incorporation of HD and 3-D channels. Of course, the transition being carried out in European countries, among which Spain is a pioneering country, from analog TV to digital television, which relies on satellites as the ideal transport network to feed the land relay stations, is particularly noteworthy. Markets such as Spain and Portugal still have a long way to go in terms of growth over the next few years in TV and Internet applications with the launch of more HD and 3-D channels and the development of the Internet supply in rural areas so that the whole population will be connected regardless of geographic area they happen to be in. In this context, and with regard to Europe, Hispasat has the competitive advantage of providing the best technical capabilities on the Iberian Peninsula and the islands both within Spain and Portugal. This has put us in the lead — far ahead of other European satellite fleets — in the numbers of DTH digital service platforms around the Iberian Peninsula. We are providing space capacity to the Portugal Telecom pay-TV platform. This has meant that Hispasat has become the only European satellite operator to broadcast the three DTH platforms on the Iberian Peninsula.
There have also been some spectacular developments in Eastern European countries, mainly due to their having joined the European Union, which has meant that the financial support has been provided for rolling out telecommunications infrastructures as well as the appearance of new DTH platforms and the distribution of ethnic channels to other regions or continents. The launch of our last satellite, Hispasat 1E, in December 2010, allows the company to present the most competitive services in this region, increasing our capacity and making this a target market for our short- and medium-term growth.
VIA SATELLITE: How does the business plan and growth of Hisdesat affect the operations of Hispasat?
Mateos: Through the company Hisdesat, Servicios Estratégicos, the Hispasat Group backed the development of X- and Ka-band satellite communications program for governmental use, which currently includes two next generation satellites, Spainsat and Xtar-Eur, the first one at the transatlantic 30 degrees West orbital position and the second one at the Eastern 29 degrees East position. In addition to meeting the communications needs of several Spanish public organizations related to security and defense, the Spainsat and Xtar-Eur satellites also provide communications services to governments of both allied and friendly countries. The combined coverage offered by both satellites reaches two-thirds of the Earth’s surface, from Denver to Singapore. Since 2008, Hisdesat has been developing the Spanish National Earth Observation Plan, integrated by the Paz and Ingenio satellites with radar and optical technology, respectively, which will provide customers with images and new services designed to map the Earth’s surface and alert on natural disasters, among other purposes. The expansion of Hisdesat activities in the field of secure satellite communications will be possible thanks to the new Hisnorsat satellite, a communications satellite in X and Ka-bands developed together with the Norwegian Ministry of Defense. Hisdesat will also offer new products and services related to the AIS (Automatic Identification System) for real-time tracking of marine traffic.
VIA SATELLITE: What is the satellite sector’s role in the government efforts to reduce the digital gap and bring benefits to an entire population?
Mateos: One very interesting subject is the role of satellites in the advance of the information society and the universalization of the coverage of its services — thanks to the speed and flexibility of its deployment without the need to set up large infrastructure.
Satellites welcome any citizen into the Knowledge Society, in any place, with unprecedented cost and development conditions, and assuring that both the large cities and rural areas have the same possibilities of accessing broadband services, indispensable to their development in today’s society. We have a very important commitment to the advance of the Information Society. From this perspective, Hispasat satellites contribute day by day to reducing the digital gap in their areas of coverage, providing Internet access in equal conditions and quality to all users and insuring that in large cities as well as less fortunate rural areas the same access to broadband services is available.
Hispasat provides high speed Internet access to remote towns in over 10 countries of Latin America in which the satellite is the only connection with the Information and Knowledge Society. Hispasat also contributes to the development of social projects that support e-learning and tele-medicine programs in countries like Chile, Peru, Brazil, Colombia and Argentina. In this sense there is still much to be done and the challenge that must be overcome is to improve broadband infrastructure and offer advanced communications services to the entire population at an affordable price
VIA SATELLITE: What is next for Hispasat?
Mateos: The space capacity demand for the dissemination and distribution of audiovisual content will remain the main driving force of our growth. From this perspective, special importance will also be given to new capacity requirements associated with new content and HD channels included in the offers of the DTH platform operators as well as to those related to the introduction of the new generation of digital television. There is also important growth in the capacity required to meet the needs associated with the deployment of broadband terminals, especially in emerging markets and in the development of applications related to new mobile services, both in terrestrial and marine environments.
We are moving forward in our internationalization process, and we are opening new markets like the United States, Mexico and Central and Eastern Europe. These markets will be essential for Hispasat’s growth and will allow us to continue to capture a large portion of the demand associated with the growth of satellite communications services.
Hispasat has redoubled its commitment to HD television with the participation in projects such as Palco HD, which works on the interoperability and dissemination for a proper implementation of high definition.
With the launching of the geostationary satellite in 2013 Hispasat AG1 (SmallGeo), Hispasat will actually carry out one of the most cutting-edge initiatives promoted by the European Space Agency (ESA) for the development and commercial exploitation of innovative and compact communication payloads (REDSAT) designed to allow a more efficient use of satellite power and consequently, to help reducing communication costs.
To conclude, Hispasat will continue its internationalization and diversification process, by providing advanced communications services for the development of an increasingly connected society.