Hispasat CEO Says Axess Acquisition Turns Operator into Service Company
The satellite industry is going through a period of consolidation throughout the value chain. During SATELLITE 2022, two such agreements were announced, with HSE the acquisition of the Global Enterprise Solutions (GES) part of Leonard DRSof the company for 450 million dollars and the acquisition by Hispasat of Axess networksone of the leading teleport operators and service providers with presence in Latin America, Europe, the Middle East and Africa.
Not so long ago AxeSat merged with Ce-Tel to create Axess Networks, and now the company is part of Hispasat. In this interview with By satelliteHispasat CEO Miguel Angel Panduro explains why the deal made sense for Hispasat and why the company wants to invest in Low Earth Orbit (LEO).
BY SATELLITE: How was the Axess deal born?
Panduro: In 2020, Hispasat approved a new strategic plan to transform the business from an infrastructure company to a service company. This was the main strategic point. To do this, we have defined different lines of action. One of them was to increase our position in the value chain. First of all [was to take action] in the video segment, even though the overall market is in decline. We bought the Telefonica video distribution unit in Latin America, located in Peru. With Axess, we also looked for M&A to accelerate what we want to do in terms of data and connectivity. Then, even though there are not many opportunities, there is already consolidation in the industry.
BY SATELLITE: This is interesting because we are perhaps seeing less consolidation involving satellite operators buying other satellite operators, but more consolidation further down the value chain. What do you think about this?
Panduro: Most end users want end-to-end solutions. They don’t understand megahertz or megabytes, they have needs. They therefore ask you to offer this end-to-end solution. This is why it is important to increase your position in the value chain. But that’s not just Hispasat’s strategy: most of our friends and competitors, whether SES or Eutelsat, have the same approach. Hispasat has been thinking for many years about doing it and now we think it’s the right time to do it.
BY SATELLITE: When did discussions with Axess begin?
Panduro: Axess is itself the result of a very interesting merger 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 and Africa. Last October, just six months ago, we started talking about this possibility. We were competing with Axess in some markets like Mexico, and we found that they are well positioned in the market with an optimized platform that they leverage very well. We understood that this was a very promising company that shares interesting synergies with us from a commercial and operational point of view.
BY SATELLITE: What will become of the Axess brand?
Panduro: Axess has a very strong brand and market position, so the management team will continue and run Axess as a stand-alone business. We are not looking to integrate it into Hispasat because we don’t want to disturb what they are doing.
BY SATELLITE: How important is an acquisition for Hispasat?
Panduro: It’s the biggest acquisition we’ve ever made. This is important because it will help us accelerate the process of our transformation, feed our P&L [profit and loss] and will give us an excellent position in the value chain. That said, we are also considering other opportunities as we believe consolidation is needed and there should be more acquisitions in the future, so we are definitely open to being a buyer in this market. We are open to analyzing different alternatives and schemes and, if there is a chance to increase our role in particular markets, we will seek to do so.
BY SATELLITE: What are your ambitions now in Latin America?
Panduro: We want to be the market leader as a service provider, that’s our ambition. We benefit from a very good financial situation, with a very healthy balance sheet, which allows us to carry out 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 in the data markets.
BY SATELLITE: What percentage of your income now comes from Latin America?
Panduro: Nearly 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 almost 80% of the Americas and only 20% of Europe. We believe that the market for satellite services in Europe is quite mature, with huge deployments of fiber and 4G infrastructure, but Latin America offers a very promising prospect for broadband, but also for the mobility market. . One of the main objectives of the Amazonas Nexus satellite is to provide capacity to mobility operators such as [Intelsat’s] Gogo, and Anuvu, etc. for in-flight connectivity and maritime services.
BY SATELLITE: You talk about investing in service capability, do you plan to invest in LEO?
Panduro: Hispasat was an investor in LeoSat with JSAT in 2017, but we decided to stop this initiative in 2019 and adopted a waiting position. Now there are a lot of initiatives, but we have some experience of what happened in the late 1990s. Before the end of the year, we will take a step forward and decide what our position will be in terms of constellations. I don’t think there is room for more than three to four constellations. There are a few carriers – SpaceX and Amazon looking to do it all, and SpaceX is moving incredibly fast here. This 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 in it, but public initiative is not the best way to deal with these rapid changes. We will analyze the different possibilities, and if we are lucky enough to be part of one of them, 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 situation, so we can invest. And secondly, we know very well some markets like Spain and Portugal and other Latin American markets. Proof of this is that the organic growth we’ve had over the past year has been around 5% while most satellite operators are seeing their revenues decline.
BY SATELLITE: So it is likely that you are partnering with OneWeb or Telesat here?
Panduro: Why not? Frankly, we are open to considering different perspectives: Telesat or OneWeb, or others.
BY SATELLITE: LeoSat did not work. You talked about a “wait and see” approach. You have now waited three years. What did you learn from this experience that you can do better next time?
Panduro: Our technical team has gained a lot of experience working on LeoSat. We love these constellations and feel comfortable using LEO as a technical solution, but sometimes that’s not enough. The success of Constellations will depend on closing business plans and I think we will need different approaches to be successful.