UPC Direct serves about 500,000 DTH customers in Hungary, the Czech Republic, Slovakia and Romania. With Eastern Europe seen as a strong growth market for satellite services, UPC Direct could be well positioned to add to its subscriber base.
    Its CEO, Magnus Ternsjo spoke with the IBC E-Daily the decision to move UPC Direct from SES Astra to Telenor as well as plans to launch HD in some of the markets where UPC Direct operates.

Ternsjo: The relationship with SES Astra has been excellent. They are a brilliant satellite operator, and we have had a happy marriage for many years. However, all our Astra transponder contracts came to an end at the same time. We had an opportunity to look at other operators. Astra was considered a strong candidate, but a key thing to consider here is that Focus Sat in Romania also has an existing long-term capacity contract with Telenor. This deal with Telenor gives us the possibility to consolidate two platforms into one single position, so we have long-term synergies as a consequence.

Ternsjo: As it will be required to operate the current Astra capacity in parallel with the new Telenor capacity with partially different content, we will build up a completely new broadcast back end infrastructure. It will also have HD capabilities, and this represents a significant investment in itself. We will continue to use the set-top boxes we have in the market. There are already HD [personal video recorders] which UPC provides in three of the markets we operate, Hungary, the Czech Republic and Slovakia.

Ternsjo: We are operating in Central and Eastern Europe, which is slightly behind the Western European countries, where HD has already launched. In our markets, we have seen two operators launch HD services, but at least one of them have not been particularly successful. However, we will look to provide HD services going forward, but we do not have an exact timing right now. I think it is likely we will have some HD services in 2010 in the second half of the year. We are likely to launch HD services first in Hungary, the Czech Republic and Slovakia.

Ternsjo: HD is very satellite capacity hungry, but we want to see higher availability and penetration of HD receivers out there in the market so we can try and forecast the uptake. We have just contracted seven transponders from Telenor and we have three transponders for Focus Sat. This should bring some space, which we could utilize for HD after we have merged and integrated the two platforms.
    I think HD will be important from a communications viewpoint. The only reason why we are holding back is we want to see a higher density of HD set-top boxes out there. I think next year, the volume of set-top boxes will be greater, plus the cost of these boxes will also go down. HD will then become important. It is just a matter of when.

Ternsjo: We are obviously feeling the impact of the recession. We have revenues in local currencies and several costs such as transponder capacity and programming contracts in hard currencies, so it is obvious we feel the impact of local currency fluctuations. That has taken its toll on margins for example. We would like to see local currencies stabilize. However, for customers, home entertainment is one of the last things they pull back on. In terms of profitability, we are running a healthy business.