BT Believes In The Power Of Satellite In Latin America

By | May 21, 2007 | Europe, Feature, Telecom

BT is confident that satellite services and technology will play a pivotal role as it looks to grow its telecoms business in Latin America. The operator recently acquired Comsat International, a provider of data communication services for corporations and public sector organizations in Latin America.

Luis Alvarez, who last week became BT Global Services‘ president for Europe, Middle East and Africa (EMEA), will continue to be responsible for BT’s services operations in Latin America.

He said that satellite services are becoming "more and more important" in the ability to deliver strong communication services to businesses in the region.

"Satellites can speed up implementation because it is much easier and faster to set up a satellite connection," he said. "It allows a customer to have a significantly higher speed when setting up some services. The second thing, which is equally important, is in terms of the coverage: There are a number of remote locations where you cannot access traditional fixed infrastructure. In those areas, satellite really plays a role. It is clearly important also to provide back-up services, so we can offer business customers a full resilience in service. Those are the three main drivers."

Other Operator’s Happy

Alvarez is bullish about the prospects for satellite in the region, and conversations with other satellite operators only seem to bolster his confidence. He said, "I was having conversations recently with people from Hispasat and they are happy about the performance of Hispamar. There is clear trend for broadcast, Internet and digital services, which is really driving this. Governments are also thinking that satellite can play a key role in the development of an information society being deployed within their borders."

The acquisition of Comsat is a major one for BT and one that dramatically increases its reach in the region. Alvarez commented, "Comsat’s knowledge of the satellite industry and services is second to none in the region. In our case, we are providing services to corporate customers all across the different countries. There are 20,000 VSAT terminals being served by Comsat in the region at the end of 2006. That is a huge number. There were customers in Brazil with over 3,000 terminals. They had customers like the Brazil Lottery. Comsat will complement our ability to serve our corporate customers."

Developments in satellite technology also mean it is the right time to offer more of these solutions to corporate customers in the region.

"Satellite will help us accelerate the implementation of many projects to serve our customers," Alvarez noted. "The solutions we are able to supply will be supplemented by satellite solutions. If you look at the technology itself, it has changed. Those problems that were associated with satellite some years ago, such as delays for voice services, have almost disappeared. Technology has also helped to make sure that satellite becomes a good complement to what we are doing."

Size of BT in LatAm

The deal for Comsat also gives BT considerably more manpower in the region.

Alvarez explained the background of the move for Comsat, and how the move is a significant sign of the company’s intent in the region. He said, "if you look at the approach we have taken in the region, we started by serving two our largest multinational customers in the region, like Unilever.

"In October 2005, we saw there was significant demand from our customers for us to grow our ability to serve them. Since then, we have almost doubled the size of our operations within the region. In those days, we had almost 70 people within the whole of Latin America – now we have over 200. With Comsat, we will have another 700 people. The size of the business and the opportunity we will have for customers will be huge. So, this is the rationale behind this deal."

Maria Velez de Berliner, president of Latin Intelligence Corp., said that BT could find tough competition in the region. She said "it is smart if we look at expansion into one of the fastest-growing telecom markets in the world. However, as a major player, BT will contend with Spain’s Telefonica and Mexico’s Telmex, the leading players in Latin America. It will depend on BT’s overall growth strategy in the region. Despite recent setbacks in Venezuela and Colombia, it would be unwise for BT to discount Carlos Slim’s Telmex. Telmex’s investment kitty, which runs in the billions, could present a formidable challenge to BT. I can say the same for Telefonica."

In terms of what BT is getting for its money, Velez de Berliner commented, "BT acquires subscribers in 15 countries. Comsat has excellent local management teams with in-depth knowledge of the market’s culture, business practices, and ability to deal with intervention and meddling by government regulators. Regarding business generation, competition is fierce in this Latin American sector. However, Comsat’s record in timely delivery of complex projects, and its experience in the private, public, and carrier sectors can only be enhanced by BT’s own excellent capabilities and reputation."

While economies in the region might be growing, Velez de Berliner warns it could prove far from easy to succeed in the region.

She said "corporate customers are driving margins down. I think the smaller markets, such as the Andes, Uruguay, Paraguay, and Central America present very good opportunities. However, BT and other telcos need to be cautious about possible nationalizations. Governments may decree telecommunications is a critical sector, which it is, and move with ownership, rates, and regulations that BT and others might not find competitive — or welcoming."

Geography

BT will now be hoping to make more of an impact in countries like Brazil. While Brazil may be an obvious target, Alvarez is also looking at other territories where BT can make an impact.

He said "clearly, Brazil is a huge opportunity to build services for our customers. Argentina and Colombia are promising markets. Also, I think some of the Caribbean islands will offer us a good opportunity to offer satellite services. But, this has to do with the development of the countries. And given that we are not going to compete directly in the residential market, we are in the corporate sector, and we will serve our corporate customers across many countries. This solution can be incorporated across many countries."

In terms of where he wants to position BT in Latin America, Alvarez said "we want to position [ourselves] as the leading player in the region for corporate customers, but with a global perspective. We are building BT for our customers and – driven by their strategy and requirements – that is why we want to extend our global leadership in Latin America. This is our aspiration."

— Mark Holmes

Luis Alvarez, BT, e-mail,

Luis.alvarez@bt.com

Maria Velez de Berliner,

Latin Intelligence Corporation,

e-mail, lat-intel@lat-intel.com

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