Earlier this month, Spanish satellite operator Hispasat announced it was joining SKY Perfect JSAT as a strategic investor in an exciting new satellite operator, LeoSat — who could become a main player in the Low Earth Orbit (LEO) satellite market. This is a huge strategic move for the operator and an indicator that it cannot rely on just Geostationary Orbit (GEO) satellites for growth. Hispasat Chief Executive Officer (CEO) Carlos Espinós talks to Via Satellite about the key reasons behind investing in LeoSat and his company’s hopes for the LEO market.
VIA SATELLITE: Why did you decide to become a strategic investor in LeoSat? What do you see as the long-term benefits for Hispasat?
Espinós: The satcom market has changed dramatically in the last few years, so we are heading toward a future of integrated technologies in which the LEO constellations will bring new growth opportunities to the operators. New and greater connectivity demands are already emerging and they cannot be completely fulfilled just with the current geostationary satellites, so we will have to go to different solutions adapted to those different needs.
An investment in LeoSat unlocks that LEO market for Hispasat. We consider it as a key opportunity to opening up new markets and delivering business growth. Thanks to its unique architecture for data communication and its focus on the enterprise market, we believe there will be very strong demand for the LeoSat solution.
VIA SATELLITE: What do you see as the major challenges in making the LeoSat investment a success? Given that there are a number of other LEO constellations planned, how confident are you that LeoSat will be one of the winners?
Espinós: Thanks to its optical meshed network, LeoSat has crucial features from both satellite and networking technology that gives this constellation important competitive advantages — ubiquity, high capacity, low latency, high security, simplified architecture, and gateway independence. Those features, together with its clear focus on the Business-to-Business (B2B) market, make LeoSat an option with high levels of future profitability and success.
VIA SATELLITE: How do you expect the collaboration with SkyPerfect JSAT to work? Why do you think they are good partner for Hispasat?
Espinós: For Hispasat, JSAT is a perfect option as a partner in this kind of agreement. We don’t have any beam or market overlapping, so we are just working on the same side, with mutual trust and adding our know-how to LeoSat. Hispasat and JSAT have a relationship that is complementarity and understanding and will ease a collaborative, shared leadership of this initiative.
VIA SATELLITE: We did an interview with Mark Rigolle recently and he said Hispasat will be taking a look the satellite configuration and constellation. Do you anticipate that this could lead to major changes?
Espinós: It is very early for us to answer that question, as we need to first review in detail the different elements of the technical design. What it is very important to us is to make sure that we are taking advantage of all the possible technological improvements at satellite and ground segment level to make the system more efficient, and providing better services to our customers.
VIA SATELLITE: How important is it for a traditional GEO operator like Hispasat to have a non-GEO strategy? Do you expect to be investing less in GEO satellites going forward? Is the future of satellite broadband going to be in LEO rather than GEO?
Espinós: Since its beginning, Hispasat has maintained a profound vocation for innovation, derived from the commitment to its customers — for which it always seeks the best solutions and services. That is the reason that has led us now, in these times of new demands and paradigm shifts, to explore ways that can enlarge the core of our business, geostationary satellites, in new verticals that demand different characteristics from those we offer from GEO satellites. The LeoSat system will allow us not only to respond to those demands, but mainly, to broaden the role of the satellite in the telecommunications market with infrastructures that complement the geostationary ones.
VIA SATELLITE: Could you tell us about your capital expenditure plans for new satellites?
Espinós: Our future plans involve increasing our capacity in orbit. Besides this investment in LeoSat, we are also analyzing other investments in GEO, including new Very High Throughput Satellite (VHTS) solutions, and even in new technologies like High Altitude Pseudo Satellites (HAPS). Our approach is to consider all the possibilities offered by technological advances in order to provide the best response to the demands of our customers and the new information society.
VIA SATELLITE: How has Hispasat performed in the first part of the year? How difficult has it been to grow revenues in this environment?
Espinós: Our industry is in the middle of a profound transformation process. Under such context, we expected 2018 to be a challenging year for the whole satellite industry, and for Hispasat as well, — and this is proving to be right. Having said this, we are performing very much as forecasted and we expect to finalize the year in line with our plans and objectives.
But it’s true that under these conditions, it is difficult to increase revenue. On one side, there is good news — there is a substantial need for connectivity out there (especially in regions such as Latin America, where we have a strong presence), and the services we provide can address a part of this demand. On the other side, increased competition from other telecom infrastructures and among satellite operators is putting pressure on prices. In addition, our customers are taking more time to decide, due to overall uncertainty. The way we are facing these challenges is by strengthening our key partnerships and by developing new business model, which will help unveil new opportunities or accelerate others.