[Via Satellite 10-10-13] Hispasat CEO Carlos Espinós says he expects Latin America to remain the key engine for growth for the company. The operator is hopeful that its Hispasat 4A satellite will be launched this year, to bring further capacity to the Americas. In a major interview with Via Satellite, Espinos talks about Hispasat’s strategy going forward and his hopes and plans for the company in Latin America.
VIA SATELLITE: What do you see as the major growth drivers for Hispasat in 2013? Do you believe the business will grow in terms of revenues and profits this year?
Espinós: There is no question that we will continue to grow. We launched Amazonas 3 in February and it has already sold out; not only the replacement of Amazonas 1, but the entire new Ka-band capacity. We also have a new orbital position at 36 degrees west, where we will add further capacity so our customers can have immediate connectivity between Europe and the Americas. Meanwhile, we are marketing heavily in Europe, especially Eastern Europe. This should enable us to continue to expand and makes us extremely upbeat about the future.
Our earnings in 2012 were excellent and show that the decision to go international was a wise one. Business in American markets has boosted overall revenue in spite of the decline in Europe. Latin America looks set to remain the key growth driver in 2013, but we are confident that Europe and North America will begin to pick up.
VIA SATELLITE: The Amazonas 4b satellite will bring a Ka-band payload to Latin America. Where are the growth markets for Ka-band capacity in Latin America in terms of verticals as well as country markets?
Espinós: We think the growth market for Ka-band capacity will stem mostly from the expansion of the information society, which in Latin America still has a long way to go. The focus will initially be on the large cities, where the satellite will complement the terrestrial networks and reach the neighborhoods and areas where these networks do not. Amazonas 3’s first Ka-band beams are pointed towards Sao Paulo, Rio de Janeiro, Brasilia, Mexico City, Santiago de Chile, Lima, Bogota and Buenos Aires, where the bulk of the population lives. Later, the Ka-band will be extended to the rest of the territories, more remote areas or areas with low population where, in many cases, the satellite will be the only feasible technology to provide telecommunications. In the medium term, the Ka-band will also be leveraged to deploy mobile back-haul networks.
Mexico, Brazil and the Andean countries could see the fastest or strongest growth, as they have the largest populations.
VIA SATELLITE: With so much capacity coming online in Latin America, is there a danger of an over-capacity situation developing in the region?
Espinós: Research indicates that demand will continue to rise in Latin America over the next decade. Admittedly, the next few years will see considerable satellite capacity coming online, and satellite fill rates could fall, but they are currently around 90 percent, if not higher. If this did happen, we would expect them to begin rising again shortly thereafter. Latin America has a long road ahead of it in terms of telecommunications and we hope to help the countries on their way.
VIA SATELLITE: Do you have further capital expenditure plans in terms of new satellites? Are you likely to commission any more satellites?
Espinós: We will certainly be building more satellites, and not only to replace existing ones when they reach the end of their useful life, but also to carry out the company’s growth and expansion plans.
Four platforms are currently in either the building or design stage, which will help expand and upgrade the fleet. There are the three-tonne Amazonas 4A and 4B to cater for demand in Latin America. The main contractor for these is Orbital Sciences of the United States.
And there are Hispasat 1F and the AG1, which includes new innovations and is being built by OHB from Germany. In a joint effort with the European Space Agency, we are developing smaller platforms and an advanced payload, REDSAT, which allows for greater flexibility in orbit. These aren’t the only satellites being built for Hispasat – others will come.
VIA SATELLITE: The company is aggressively expanding with new satellites. How are you funding these new satellites? Which verticals are you targeting for new business?
Espinós: We tap the capital markets to fund each project, presenting a solid, profitable and attractive business plan. The company’s sound financial position and business are well known. So far, we haven’t had any problems raising funds. The response has always been positive and we have managed to fund our satellites under excellent repayment and pricing terms. We have not had to turn to shareholders and have kept leverage tight. To illustrate, Hispasat’s net debt/EBITDA ratio at 31 December 2012 stood at a very reasonable 1.82x.
As for new businesses, as a satellite operator Hispasat targets the sale of megahertz and space capability, and this will remain our core business. We have also developed a broadband unit to provide solutions to Internet providers.
VIA SATELLITE: What percentage of the company’s revenues come from Latin America? Do you expect this figure to increase?
Espinós: The Hispasat Group is now Latin America’s fourth largest operator by revenue. In this market, we guarantee high quality space capability to provide all type of satellite communications services. In 2012, the lease of space capability from the Americas accounted for 54.5 percent of our revenue, led by Latin America, which saw turnover increase by more than 13 percent. Our business has continued to grow there in 2013 and Latin America is still a solid market, with sustained growth.
VIA SATELLITE: What is the next stage of Hispasat’s growth plan?
Espinós: The future of the Hispasat Group lies in both organic growth (new orbital positions and four new satellite projects underway with launches between this year and 2016) and acquisitions (as we are open to any corporate deals arising that could enable us to expand our growth horizons). We have the financial wherewithal, the technological development, the leadership position in strong markets – such as Spanish and Portuguese-speaking ones – and a high degree of operational efficiency. All this leaves us in a strong position to undertake new challenges and bodes well for our future.
VIA SATELLITE: Are you looking to target any other regions other than Europe and Latin America?
Espinós: Yes. We want to strengthen our foothold in the Americas, but also to expand our presence in emerging markets, such as Eastern Europe, the Middle East or North Africa, or anywhere else that can enable us to obtain new orbital positions.
