[Satellite News 08-23-10] Arsat, the satellite operator owned by the Argentinean government, could ultimately gain 50 percent of its revenues from outside of Argentina, and could even form a partnership with the likes of SES World Skies, Telesat and Intelsat to boost its position in North America, Pablo Tognetti, Arsat’s chairman and CEO told Satellite News.
     Arsat is looking to become a key satellite provider in the Americas over the next few years. The operator, which came into being in 2006, holds orbital rights which will enable it to offer services all across the Americas. The company is in the midst of an aggressive capital expenditure program and will launch three new satellites by 2014 (Arsat 1, 2 and 3).
    These satellites will bring the operator a considerable amount of capacity, not just to serve the needs of the population in Argentina, but also to become more of a force in Latin America, and North America. In the following interview, Tognetti talks about the operator’s plans to use this capacity, and where ultimately he hopes to position the operator once these satellites have been launched.

Tognetti: We want to provide services across North as well as Latin America. The single shareholder is the Argentine State, with the major shareholder being the Ministry of Planning and Public Investment. Arsat’s satellite fleet deployment plan involves three satellites, with the first satellite – Arsat-1, being under construction and slated for launch by mid 2012. We have signed a contract with Arianespace for the launch of this satellite. We plan to launch Arsat-2 in 2013 and then Arsat-3 in 2014 respectively. So, the initial challenge is to complete the construction of Arsat-1 and Arsat-2 satellites. This is taking place with a company called INVAP, a company based in Southern Argentina. This is a technology company, which is the prime contractor of the satellites. There are a number of important programs in Argentina regarding social inclusion in which satellites can make an impact. Satellite access to Internet and TV services has become very important to reach all areas of Argentina. Satellite is expected to play a crucial role. The challenges are about building these satellites, and then helping the Argentinean State bring the benefits of this technology across Argentina in very important special programs. It is important we have our own satellites here.

Tognetti: Right now, we are commercializing 800 MHz of capacity. Arsat-1 will have 32 transponders, of 36 Mhz equivalent capacity, that would be in the region of 1100 MHz. We expect to be very close to filling the capacity on the satellite very soon after launch. We expect by the time the satellite is launched, it will be fairly full. In terms of capital expenditure, we are spending around $200 million over the next 12 months and this represents the investments for Arsat-1 and Arsat-2.

Tognetti: Once we have our satellites in-orbit, it will be much easier to develop new business for the company. Most of the capacity we use is for use in Argentina. We have some capacity being used in neighboring countries. We expect to continue serving other countries in the ‘Southern Cone’ with high quality services. Our satellites will have good power, as well as good coverage. The new satellites will also help us increase our coverage. But, our overall focus will remain the same, though we will be able to offer more services to customers. In the future, we want to also deliver services in North America. Some of our new satellites will have Ku and C- band coverage in North America. At the moment, around 15 percent of our revenues come outside of Argentina. In the future, we expect, that with our own fleet going forward, we will reach 30-35 percent of our revenues from outside Argentina, and, once we have coverage over North America, around 50 percent of that figure should come from business in North America. So, North America could provide significant business for us. 

Tognetti: We would like to form some partnerships with operators in North America. We haven’t decided yet who will partner with. But, we will talk to other satellite operators with a presence in North America such as Intelsat, SES World Skies and Telesat. We already have strategic agreements for satellite capacity with these operators. Arsat-2 will provide capacity over North America, so we think 12 months prior to that, we might look for partnerships so that we could establish them in 2012.

Tognetti: We don’t have X-band planned in our satellites. We have C- and Ku-band capacity. But, we are providing some capacity to the Ministry of Defense (MoD) in Ku-band. We expect that segment to grow. There are no specific plans to build satellites with X-band capacity in the near future. We will help solve some of the demands that the MoD has in regards to capacity. I understand that a re-formulation of the strategy in telecommunications is taking place at MoD. So, we expect to fill their needs in terms of capacity. Several government agencies, such as health and education, for example, are also becoming aware of the importance and the potential in using satellite technology and services. There is much stronger user demand. We are getting more and more demand from government departments. So, we are seeing potential demands from customs, police departments and other institutions who want their networks backed-up, for example. 

Tognetti: We expect to see these services growing in Argentina. We also expect the demand for entertainment and communication services in Argentina, as well as the Latin America region will continue to grow. There is a need for more satellite capacity across the region. We expect there will be a number of government projects, which aim to reach people who have previously not had access to these types of modern communications services. So, you are seeing projects about switching to digital TV, social inclusion projects etc. We expect to be a major player in helping these projects succeed.

Tognetti: We are working with local broadcasters to deliver content across the country, particularly DTH services, and these will complement terrestrial digital TV services. Also, we are very much focused on the government market. In terms of technology, we have upgraded our teleport to deliver services on a DVB-S2/MPEG-4 carrier. Though we are more focused on the government market, I believe there is a private market that is going to grow in Argentina, and in the region.

Tognetti: We are studying the potential for Ka-band in Argentina. But, generally, the growth that was expected to take place in satellite broadband by and large hasn’t happened. We would like to watch this market. The first target for us is to have three satellites. But, we are also thinking about the possibility of more satellites, as long as we can use the capacity. For example, we would consider an Arsat-4 satellite to be a hybrid satellite with Ka-band on it. It is still under very broad consideration.

Tognetti: We would not think about commissioning an Arsat-4 satellite until we have launched our Arsat-1 satellite. We are newcomers to the market, so we do not wish to go too fast. We expect the demand for capacity to grow. Argentina is a large country, which has areas such as Patagonia, where the population density is very low, hence there has been little interest in the private sector to deploy terrestrial networks. We think there is a huge opportunity for providing satellite services. We expect to grow in that area.

Tognetti: In 12 month’s time, we will still not have launched Arsat-1. But, I hope in 12 months time, we will have started to lock in capacity for that satellite. We hope to see strong demand in areas such as digital TV and improved connectivity. We also expect there will be even more awareness of the potential for satellite.