[Via Satellite 09-15-2016] Satellite operators in Latin America’s three largest economies are hopeful that economic weakness in the region will pass in the near future. New presidents in Brazil and Argentina, and policy changes in Argentina and Mexico specifically, are having salient impacts on the countries’ telecommunications sectors.

“It is a really tough year for us,” Gustavo Silbert, president of Brazil-based Embratel Star One, said Sept. 12 at World Satellite Business Week in Paris, France. “Inflation is around 10 percent, so it is very, very bad. Unemployment is around 11 percent. Those are the bad things that happened, but what we see now is a kind of turning point; we have a new government with a lot of expectations.”

Brazil impeached its president, Dilma Rousseff, this August after nearly a yearlong process. The impeachment, combined with the Zika crisis and ongoing market challenges from factors like the weak state of the oil and gas market, have further stressed the country’s economy. Silbert said Star One typically makes purchases in U.S. dollars but sells in Brazilian reals, making currency depreciation another challenge. Still, he said the company has had some notable highlights, particularly with the recent Rio de Janeiro Olympic Games. He said Star One provided 25 dedicated channels for the Olympics in full HD, as well as some 4K, and made content accessible to “every screen,” including using internet to reach multiple devices.

In Argentina, national satellite operator Empresa Argentina de Soluciones Satelitales Sociedad Anonima (ARSAT) said inflation has stalled out the economy, but with the country’s renewed interest in international friendships, moods are upbeat for near-term turnaround.

“Certainly the fact that inflation reached 20, perhaps 30 percent or more in the past years created stagflation of the economy, and we are in the battle to control inflation,” said Henoch Aguiar, vice president of ARSAT. “We think in the next months we will see that and expect good movements of the economy for the next year.”

Aguiar added that while the national economy has struggled, satellite in particular has grown at an appreciable rate. In an accompanying presentation, he said 65 percent of ARSAT 1, the operator’s first satellite, which launched in 2014, is already contracted. The satellite has a 14 percent backlog, 10 percent more capacity sales are forecasted for next year, and another 10 percent are not being leased commercially. ARSAT 2, launched in 2015, is 35 percent utilized, with a 25 percent backlog and future forecasted sales of 30 percent within the next one to two years. Like its predecessor, 10 percent of the satellite is also not available for commercial lease.

In a step change from the past, Aguiar said the Argentine government is planning to shed some of its protectionist policies in favor of letting international satellite operators sell capacity in the country. Even among differing political parties, he said this mindset remains the same: “all of them share one idea — Argentina must be open to the world.”

Aguiar said the recession in Argentina has impacted data services more so than broadcast television, with entertainment apparently carrying more value during hard times. Silbert said broadcasting is down in Brazil, though he added Star One’s 70 degrees west orbital location has amounted to a “hot spot” for the operator as an estimated 20 million receive-only C-band television dishes are pointed at the operator’s satellites at this position. That equates to almost 40 percent of houses in the country, he said.

Mexico’s Secretaria de Comunicaciones y Transportes’ (SCT) Mexsat Program, though part of the government, is also feeling economic pressures as it tries to finance a replacement for the Centenario satellite destroyed in a 2015 Proton failure. Omar Charfen Tommasi, Mexsat program director at SCT Mexico, while stressing that Mexsat does not have a profit motive, said the organization lost replacement satellite money because of Mexico’s financial situation.

“With the gas and oil prices going down and with a sequestration process, we have budget constraints and we need to get creative in carving the correct financial solutions for our needs. That is the case with the new satellite we are planning to buy to provide backup to the Morelos 3 satellite due to the launch failure that we had last year,” he said.

Centenario was the second of a would-be trio of satellites Mexico’s SCT had planned for national communications services and was identical to the third satellite, Morelos 3. The satellites were to serve as backups for each other. Tommasi said the SCT still has a requirement for three spacecraft to meet needs in fields such as national security, e-learning, and telemedicine.

“For Mexico Connectado, we have 100,000 sites connected. Only 30 percent of those are connected via satellite, but we want to increase that number. We want to reach 200,000 sites in the next two years,” he said.

According to Tommasi, the SCT did recover the insurance amount of the lost satellite, but this money “went into the Mexican treasury and was used for other priorities.” He said SCT has been engaged in performing a market study on getting a replacement satellite and hopes to issue a Request for Proposal (RFP) to satellite manufacturers by the end of this year.

Tommasi said Mexico’s commercial telecommunications sector has grown robustly over the past four years thanks to legislative changes that have introduced competition. He said prices have fallen for connectivity by 23.2 percent over the last three years, and Foreign Direct Investment (FDI) in telecommunications is now second only to oil and gas. The SCT estimates Mexico has 54 internet users for every 100 residents, up from 21 out of 100 prior to 2012 reforms. SCT is expanding access to connectivity further now that the Mexican constitution deems connectivity to be a human right for its citizens.