Hispasat CEO, Miguel Angel Panduro. Photo: Hispasat

The satellite industry is going through a period of consolidation down the value chain. At SATELLITE 2022, two such deals were announced, with SES acquiring the Global Enterprise Solutions (GES) part of Leonardo DRS’s business for $450 million and Hispasat’s acquisition of Axess Networks, one of the leading teleport operators and service providers with a presence in Latin America, Europe, the Middle East, and Africa.

It wasn’t that long ago that AxeSat merged with Ce-Tel to create Axess Networks, and now the company is part of Hispasat. In this interview with Via Satellite, Hispasat CEO Miguel Angel Panduro talks about why the deal made sense for Hispasat, and why the company is interested in investing in Low-Earth Orbit (LEO).

VIA SATELLITE: How did the Axess deal come about? 

Panduro: In 2020, Hispasat approved a new strategic plan oriented to transform the company from an infrastructure company to a service company. This was the main strategic point. To do this, we defined different lines of actions. One of them was to increase our position in the value chain. Firstl [was to take action] in the video segment, even though the overall market is declining. We bought the Telefonica video distribution unit in Latin America, located in Peru. With Axess, we also looked for M&A to speed up what we want to do in terms of data and connectivity. Then while there are not many opportunities, as there already is consolidation in the industry.

VIA SATELLITE: It is interesting as we perhaps are seeing less consolidation involving satellite operators buying other satellite operators, but more consolidation down the value chain. What do you think of this?

 Panduro: Most of the end users want end-to-end solutions. They don’t understand megahertz or megabytes, they have needs. So, they are requesting for you to offer that end-to-end solution. This is why it is important to increase your position in the value chain. But, this is not just the strategy of Hispasat: most of our friends and competitors, whether SES or Eutelsat, are having the same approach. Hispasat was thinking for many years to do this and now we believe this is the proper time to do it.

VIA SATELLITE: When did the talks with Axess start?

Panduro: Axess comes from a very interesting merger itself between AxeSat and Ce-Tel. AxeSat was a Colombia based company focused on Latin America and Ce-Tel was based in Germany and focused on Europe, the Middle East & Africa. Last October, just six months ago, we started to talk about this possibility. We were competing against Axess in some markets such as Mexico, and we found out that they are well-positioned in the market with an optimized platform that that they operate very well. We understood that it was a very promising company that shares some interesting synergies with us from the business and operational point of view.

VIA SATELLITE: What will happen to the Axess brand? 

Panduro: Axess has a very strong brand and market position, so the management team is going to continue and run Axess as a standalone company. We are not looking to integrate it into Hispasat because we don’t want to disturb what they are doing.

VIA SATELLITE: How significant of an acquisition is this for Hispasat? 

Panduro: This is the biggest acquisition we have ever made. It is important as it will help us speed up the process of our transformation, will feed our P&L [profit and loss] and will give us a great position in the value chain. Being said that, we are also thinking about other opportunities, because we think consolidation is needed and there should be more acquisitions in the future so we are definitely open to be a buyer in this market. We are open to analyze different alternatives and schemes and, if there is a chance to increase our role in particularly markets, we will look to do it.

VIA SATELLITE: What are your ambitions now in Latin America?  

Panduro: We want to lead the market in terms of being a service provider, that is our ambition. We enjoy a very good financial position, with a very healthy balance sheet, which allows us to make more potential acquisitions. We are now the third ranked player in Latin America, but we want to become the leader in the region -both in the video and now data markets.

VIA SATELLITE: What percentage of your revenues now come from Latin America? 

Panduro: Close to 70% of our revenues now come from Latin America. With the next launch of our Amazonas Nexus satellite at the end of this year, we will probably be close to 80% from the Americas, and only 20% from Europe. We believe the satellite services market in Europe is quite mature, with huge deployments of fiber and 4G infrastructures, but Latin America offers a very promising perspective for broadband, but also for mobility market. One of the main targets for the Amazonas Nexus satellite is to provide capacity for mobility operators like [Intelsat’s] Gogo, and Anuvu, etc. for in-flight connectivity and maritime services.

VIA SATELLITE: You talk about investing in service capability, are you planning to invest in LEO? 

Panduro: Hispasat was an investor in LeoSat along with JSAT in 2017, but we decided to stop this initiative in 2019 and adopted a position of ‘wait and see.’ Now there are a lot of initiatives, but we have some experience with what happened at the end of 1990s. Before the end of the year, we will a step forward and make a decision in terms of what will be our position in terms of constellations. I don’t think there is a place for more than three to four constellations. There are a couple of operators – SpaceX and Amazon that are looking to do everything, and SpaceX is moving incredibly quickly here. That is a significant change in our sector. In Europe, we see a possible new deployment of a constellation and we are trying to play a role there, but public initiative is not the best way to face these rapid changes. We will analyze the different possibilities, and if we have the chance to be part of one of them then we will.

What can we offer? I would say we can offer two things. First of all, we are not a big company, but we have a very good financial position, so we can invest. And secondly, we know some markets like Spain and Portugal and other markets in Latin America very well. Proof of this is that the organic growth we have had over the last year has been around 5% while most satellite operators are seeing decreased revenues.

VIA SATELLITE: So, the likelihood is you will partner with OneWeb or Telesat here?

Panduro: Why not? Frankly speaking, we are open to consider different perspectives: Telesat or OneWeb, or others.

VIA SATELLITE: LeoSat didn’t work out. You talked about a ‘wait and see’ approach. You have now waited three years. What have you learned from that experience that you can do better next time?

Panduro: Our technical team gained a lot of experience while working on LeoSat. We like these constellations and we feel comfortable with LEO as a technical solution, but sometimes it is not enough. The success of constellations will be about closing business plans and I think we will need different approaches to succeed.