Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Wednesday, May 20, 2020

Intelsat bets on the mobility vertical with a new model for rural areas in Latin America

Juan Pablo Cofino, Regional VP for Latin America and the Caribbean of the satellite operator, assured Convergencialatina that operations in the region will not be affected by the judicial recovery process in the United States. He ruled out layoffs and estimated that the financial restructuring will take between six and twelve months.

<a href="http://www.convergencialatina.com/Nota-Desarrollo/313331-12-25-Intelsat_y_Andesat_se_asocian_para_llevar_3G_a_154_comunidades_rurales_en_2020" data-mce-href="http://www.convergencialatina.com/Nota-Desarrollo/313331-12-25-Intelsat_y_Andesat_se_asocian_para_llevar_3G_a_154_comunidades_rurales_en_2020">The mobile broadband model in rural areas of Peru faced by Intelsat and Andesat has 13 sites deployed. With shared infrastructure and network construction costs, the companies aim to establish 17 sites by the end of May and 154 by the end of the year. The project takes advantage of the Operador de Infraestructura Móvil Rural (OIMR) (Rural Mobile Infrastructure Operator) license of Andesat, while Intelsat collaborates with the construction of an integrated space, mobile broadband infrastructure, bandwidth capacity and integrated service operations.

Juan Pablo Cofino, Intelsat's Regional VP for Latin America and the Caribbean, stressed to Convergencialatina that this is an innovative model for mobile operators, not only in Peru but in the entire region, in the coming years. “The operator minimizes his risk of infrastructure capex because we deliver it the tower, we build it, in addition to providing the service. They only pay for the consumption of each tower. This is the growth model for the upcoming years in the region", he said.

In an interview with this newspaper a few days after acogida de Intelsats filing under Chapter 11 in the United States, Cofino clarified that operations in Latin America will continue normally, ruled out layoffs and based the decision on the company's high indebtedness and the necessary investments to deal with the release of C-band spectrum ordered by the US FCC.

Convergencialatina: What are your expectations for results with the decision of a few days ago in the United States and how will it affect your operations in Latin America?

Juan Pablo Cofino (JPC): Intelsat made the decision to voluntarily enter into a financial restructuring process, which we hope will last between six and twelve months. These mechanisms are created to be able to restructure. The measure responds to a large debt for years that Intelsat had been carrying, added to the FCC's decision. This process of C band release has benefits for the company, with returns of US$5 billion, whereby Intelsat had to participate. But it takes a lot of working capital to deal with the release of spectrum, equipment, migration of services. The initial investment that all this requires generates a lag in investments.

We hope that the financial restructuring will work for us, that it allows us to restructure our balance sheet and then invest and come out stronger, with less debt. Meanwhile, business continues as usual.

Convergencialatina: Could staff be laid off in the region?

JPF: No. Everything will remain the same, and investment plans continue. Intelsat entered this process due to the debt issue, compared to others that go bankrupt, due to liquidity problems. Our business is profitable.

Convergencialatina: Are there any new satellite launches planned with coverage in Latin America?

JPC: Yes. The Galaxy 30 and the I-40e are scheduled for launch in the fourth quarter of this year. The former complements our fleet, while the I-40e is part of the HTS Epic satellites, and is primarily intended for government and Enterprise customers in the United States.

Convergencialatina: One of Intelsat's latest innovations was the recovery of the IS-901 with the landing of the Northrop Grumman Mission Extension Vehicle (MEV-1).

JPC: This is a way to extend the useful life of the asset efficiently. It offers five years of useful life, whereby for the clients, it implies a maintenance of the quality of the services. Or less migration costs. This satellite has coverage in Latin America.

In July, the MEV-2 will also be launched with the IS-10-02, with footprint on Europe and Latin America. In this second lauch, the coupling will be slightly different.

Convergencialatina: Does the association with Andesat in Peru, for mobile broadband in rural areas, register as another innovative model for the region?

JPC: In Latin America we have different growth areas, in three verticals: media, networks (it includes government) and mobility. With Andesat we are facing an end-to-end project, which provides a 3G solution for mobile operators in remote areas. It is an innovative model because the operator minimizes its risk of infrastructure capex: we deliver the tower, we build it, in addition to providing the service. They only pay for the consumption of each tower. This is the growth model for the coming years in the region, in which each one focuses on theirs: we on satellite capacity and they on customer acquisition and retention.

The Peruvian government identified some 16,000 available sites to capture in rural areas with 300 to 2,000 inhabitants, under the OIMR model, and we want to reach about 3,000. The sites have already started to be deployed, still with some care for the coronavirus, and today there are 13 already in operation.

This model is the beginning of something great. We want to replicate it with Andesat (present in Colombia, Chile, Argentina) and other operators in Latin America.

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