BT, the U.K. based telco, is one of the largest buyers of satellite capacity in the region. The operator has been building its presence in Latin America, and needs satellite capacity to serve a number of its corporate clients. Jacinto Cavestany, vice president, Latin America at BT Global Services, talks about the telco’s plans to expand its presence in the region and how satellite fits in to its overall communications strategy.

VIA SATELLITE: How is BT looking to grow revenues in Latin America? What segments of the market is the operator targeting to grow its business?

Cavestany: We started almost a decade ago in Latin America around some of the biggest global contracts that we signed, especially Unilever. It was reactive in the sense that we had to start operations there because some of our global customers were having operations in the region. At that point, we had a period of time where we focused on delivering services in Latin America. We were not proactively looking for customers in the region. We were reactive for contract management. That happened in an important way.
We also bought two companies, which really started to enhance our footprint in the region. One was Infonet — a U.S.-based company that was strong in Latin America, mainly through distributors. It didn’t have a direct sales force, but had a strong network of distributors. The second acquisition was Comsat — another U.S. company only active in Latin America. It had a good sales force in the major Latin America countries and great specialists on satellite communications. We saw this company as a fantastic opportunity to sell to Latin American corporate customers, as well as enhance our footprint in the region with satellite connectivity, which we forecasted would be important for at least two to three decades until cable is deployed everywhere. So, in the last four years, what we have been doing is leveraging on these assets and our global contracts with the likes of Fiat, Pepsi and the others. We have been working with major Latin American companies, which are starting to become multi-nationals. We have also been successful with public administrations, especially in Colombia and Brazil. We have won contracts with Caixa Economica Federal and Correios in Brazil and Compartel in Colombia. All of these contracts have sped up our growth in the region. We are able to balance our global capabilities with the opportunities to grow with these “multi-Latinas” as well as public administrations.

VIA SATELLITE: How do you use satellite alongside other telecoms technologies to provide services to customers in the region?

Cavestany: In the region, our major connectivity at this point is coming from satellite technology. At the end of 2012, we will have 40,000 customer sites connected in the region, with half of them coming from Brazil. We are one of the unique companies that is operating five huge satellite teleports around the region. We have seamless connectivity from all of our customers from Mexico to Argentina. For us, this is an incredible asset. We are also investing in fiber optic networks in Sao Paulo. We already have assets of such kind in Bogota and Buenos Aries. We will also implement 20 percent of our MPLS POPs in the region. That is really important because we feel the integration we are doing between our MPLS global network and the satellite capacity of the region will be quite unique. Any BT customer from anywhere in the world can have a unique network in the region and all the processes from pricing to delivery and maintenance are very well integrated. So, we think the balance between satellite and fixed networks is really one of our major assets. We expect satellite to continue growing. Satellite is a scarce resource in Latin America, so we are among the three biggest buyers of that resource. We want to stay in that high position.

VIA SATELLITE: What levels of growth are you looking for in Latin America during the next two to three years?

Cavestany: We are trying to double our size in the next two to three years. We have investment plans for Brazil, Colombia and Mexico where we want to double our size. In three years time, we expect to be growing faster than the market. But, really, what we are aiming to do is higher double-digit revenue growth in the countries I mentioned, and close to double-digit growth in the other countries where we are investing less, but acting in a more reactive mode.

VIA SATELLITE: With the economic recession having very little impact in the region, do you see this economic growth sustainable in the mid-term?

Cavestany: We think so. Clearly, Latin America is seeing a huge transformation in its economies. I think they have learned the lessons of the past, where they suffered from high debt and low economic growth. What is happening now is that we have seen the rise of massive exports to China in terms of food and other goods. The export capabilities of the region will last well into the future. It looks as though Latin America will be a major export supplier of food, energy and minerals for a long time. This is driving economic generation in many countries such as Brazil, Colombia and Peru where consumers are coming to the market in the millions, and this is boosting the internal consumption in these countries. I think this process could last for at least another decade. If they are able to keep their macroeconomics stable with reduced inflation and reduced debt, we can expect some excellent years in Latin America. The economic problems in Europe and North America are not having any impact here. It is perhaps impacting Mexico, but it is not really impacting anywhere else.

VIA SATELLITE: Considering the presence of many major telcos in the region, particularly that have Spanish and Portuguese speaking roots, how difficult is it for an operator like BT to have an impact?

Cavestany: We are quite specialized as far as the corporate global customers. Even though there are very important telcos in the region such as Telefonica, Telmex and Portugal Telecom, our capability to be global versus a multi-local approach that most of these other companies are following allows us to have a very different approach to the market. Given that most of these telcos are hugely focused on consumer markets, our specialization on global customers and “multi-Latinas” and governments, gives us an incredible opportunity against them. When we are offering services in many countries, we have a quite seamless offering. If we compare with these telcos, they have a separate offer for each country and then try to integrate. I think our capacity to be a global company looking to the world is unique. This ability to see Latin America as a region to offer seamless services is really unique. I don’t feel as though there are many competitors of this kind in the region.

VIA SATELLITE: Could you tell us about your capital expenditure plans in the region? What are your network investments?

Cavestany: We don´t disclose regional capital expenditure numbers, but we have three major investment plans in the next three years. As far as infrastructure, we are going to increase our MPLS points of presence. This is very important. We need to be very close to our customer sites otherwise our last mile costs could be huge. So, we are planning to increase our points-of-presence by more than 20 percent in Latin America. We want to reach a level of 105 POPs in the region. This is quite a strong number if you compare it with other corporate telecoms service providers in the region. We are building Network-to-Network Interfaces (NNIs) in the region, so these network-to-network interfaces between our global MPLS network and other regional players. This will allow us to be very competitive when offering last mile services across the region and will complement our POPs investment. We are also building a couple of new data centers in Colombia and Mexico. The one in Colombia is already available. These will join the existing ones in Sao Paulo and Buenos Aires. We would also like to increase our cloud services in the region. We will be able to cover customers in the region, as well as outside, who want cloud services. We are also working on creating three centers of excellence in the region, one in Rio de Janeiro for the satellite part, another one in Bogota for data center services and security and one in Mexico for IP telephony and cloud services. These three centers of excellence will help any of our customers move to these kind of services. We are also going to hire 250 people, which will increase our workforce in the region by 20 percent in the next three years. Most of the hires will take place in the early part of the plan. We will have a good number of new sales people and engineers who will help us cope with the growth we are already seeing.