WASHINGTON, DC – Latin America continues to be the most difficult region for satellite operators right now. With a worsening economy, it does not look as though things will change any time soon.

Despite the doom and gloom outlook, there may be a bright spot on the horizon, according to Maria Velez de Berliner, president of Latin Trade Solutions. She told a panel on Latin America at Satellite 2003 that the region “has gone through crisis before. It will come out and telecoms and satellites will be there when it does.”

Delores Martos, vice president for Latin America at New Skies Satellites, said, “All of us recognize it is not the best time in Latin America. There are a number of factors playing a role. Having excess capacity is a problem. But, we can see signs of recovery.”

One of the main barometers for the region will be the performance of the Brazilian economy. Brazil is the largest country in the region and as such acts as a key performance metric. Lincoln Oliveira, CTO of Star One, told Interspace at Satellite 2003, “The economic recovery will happen first in Brazil and when it happens in Brazil, other countries will also pick up economically … There is some exchange rate volatility in Brazil. But, despite the difficulties, we believe we are moving in a positive direction.” Star One, which is part of the SES Global umbrella, is ordering two replacement satellites.

Oliveira expects the recovery in the region to be a slow, but steady one. “We are still in a defensive mode. I think maybe things will be better in 2004 and after. Despite those indicators of a better GDP growth, I still think it is premature to believe there will be more aggressive growth.”

He continues: “There are a number of unfavourable drivers. There are limitations on sustaining new investments. Because of the surplus of capacity, we hope we won’t be entering a price war” in the near future.

Oliveira expects a recovery in demand for broadband services. “Broadband is the key growth area for us. That will be the main driver that will bring more need for transponders. We are the first to provide public satellite Internet access in Latin America … There are higher costs to pay because we are in a learning process. But, on the other hand, we are alone in the market. We are trying to go into niches where DSL and cable are unable to offer services.”

Most of the global satellite players operate in Latin America. SES Global (through Star One), PanAmSat and Intelsat account for around 70 per cent of the FSS market. PanAmSat, which concentrates its efforts on the broadcast side, has a hub in Miami and like most operators believes growth in Brazil could act as a regional catalyst.

Carmen Gonzalez-Sanfeliu, vice president of sales for Latin America at PanAmSat, said, “We have great expectations in Brazil. There is a growing demand for Hispanic programming. Also, the use of rural applications has increased. Internet and broadband penetration levels continue to increase, creating an attractive market. We expect good growth in 2003 in the Brazilian VSAT market, as well as the fledgling broadband market. As corporations begin to migrate their networks from C-band to Ku-band, we are well- positioned to meet the coverage and connectivity demands with dedicated regional coverage.”

While the big three paint a bright picture, for other new players in the region, the next two years could be an uphill struggle. Nahuelsat, which has focused on the Argentine market in recent years, is adopting a strategic change and is now looking more towards improving its position in other areas of the region.

Jorge Irigoin, Nahuelsat’s new CEO, outlined the company’s more expansive approach at Satellite 2003. “We are starting an office in Mexico. We will have increased regional capacity. We want to strengthen regional alliances. We want to get closer to the customers and improve our sales capacity outside of Argentina. There has been a regional economic slowdown. The satellite business is growing but it will be slow during the next five years.”

Hispasat, the Spanish operator, also has ambitious plans in the region. Its Amazonas satellite, which is under construction, will have 32 Ku-band transponders covering Latin America.

–Mark Holmes