[Satellite News 09-28-09] For Embratel, one of the largest telcos in Latin America, DTH services are a vital component to the operator’s growth strategy. Antonio Joao, executive director of Embratel told Satellite News that his company is banking on a new triple play offering, which Embratel expects will capture 40 percent of the Brazilian DTH pay-TV market share in the next two years.
    “We started the operation in December 2008 and today we have around 100,000 subscribers. Our goal is to keep the growth level in the second semester. We are shooting at a potential target market of 20 million households. We think at the very least there are 10 percent of these households who are legitimate target.  So, our target market is around two million households,” said Joao.
    In late 2008, the operator launched DTH services in Brazil, a country with a population close to 200 million people, in hopes to make further inroads in the pay-TV market. While Brazil is undoubtedly a huge market, the telco is setting modest targets for ‘Via Embratel’, its pay-TV service.
    To drive growth and meet goals, Embratel is using satellite technology. The platform leases satellite capacity from Brazilian satellite operator, Star One. Embratel is choosing satellites rather than IP to deliver its TV service. “We don’t intend to offer IPTV services. Embratel has a good partnership with the biggest cable TV provider in Brazil. So, we don’t need an IPTV offering. So, for the households, which don’t have cable, we can offer a DTH service,” said Joao.
   Embratel is also looking to take advantage of its ability to combine some of its assets with fixed line phone services, under the brand Livre. “We are working to offer WiMAX, that will bring broadband and phone services, in the next two months. We are working with other brothers in Embratel so we can offer a triple play of services to customers, so broadband, phone and DTH services this year. The triple play solution will be a key part of our strategy going forward,” he said.
    Joao said Embratel will break even on its investment in the first half of 2010, which will require 500,000 subscribers. With an ARPU around 75 Brazilian Reals ($41.18). The company feels it is in good shape to hit its target and grow beyond expectations. However, the challenge to meet expectations will not be easy, as there is increasing competition in the region’s pay-TV sector. “The competition in Brazil is tough. Today, the market is served by four DTH operators. However, I don’t think you will see any more DTH operators enter the market over the next two years,” said Joao.
    With pay-TV being a relatively new business in Brazil, the operator is no rush to launch additional services, such as HD and PVR, and when it does, Embratel might not need new capacity from Star One, according to Joao. “We have plans for HD and PVR in 2011.The key question about the availability of content. Today, local broadcasters are starting to produce local content in HD for the pay-TV market. We are seeing international content also being produced in HD. But, the production of HD content here only started 12 months ago. We hope to have around 10 pay-TV HD channels. There could also be a further number of HD channels available from local broadcasters. We think in 2011, there will be 500,000 HDTV ready households in Brazil,” he said.
   Star One CEO Gustavo Silbert supports Joao’s belief in HD’s Latin American potential. “We are signing some contracts with broadcasters for HD channels. Some customers, especially in Brazil, are beginning to line-up HDTV channels, creating an opportunity to sell capacity for these channels,” he said.
   Equipped with a positive outlook, Embratel is now looking to get better deals with broadcasters, which Joao thinks will happen if the company can boast a healthy base of subscribers. “Our main challenge in a country with low income and low penetration is to keep offering the best combination in price/content. Our goal is to reach as fast as possible big volumes of subscribers to reduce the content prices. One of the big challenges for us will be dealing with programmers and content providers. We need to build up a critical mass, but once we have done this, this will give us more leverage in negotiations with them going forward,” he said.