Strong Growth Ahead for Latin America Satcom Market

Advancement to continue despite economic headwinds, expansion of fiber networks

Paris, Washington D.C., Montreal, Yokohama, April 29, 2015 - According to Euroconsult's newly released report, Satellite Communications & Broadcasting in Latin America, total satellite capacity usage increased at an 8% CAGR over 2009-2014, driven by growing requirements for satellite pay-TV (+1,600 channels), VSAT services (+50,000 VSATs), trunking and backhaul. Euroconsult projects total capacity leased to grow at a 10% CAGR over the next decade, translating to a total of over 330 Gbps of traffic flowing over satellite by 2024.

Following strong growth in demand, operators have invested heavily in expansion satellites causing total regular capacity supply in Latin America to double by 2017 (from 2010 levels), while HTS capacity supply will increase eight-fold to over 370 Gbps by 2017.

"As supply additions are projected to outpace growth in demand, the average regular capacity fill rate should decrease from 80% in 2014 to 70% in 2017," said Nathan de Ruiter, Senior Consultant at Euroconsult and editor of the report. "The trend of falling fill rates is most profound in Ku-band, where utilization levels are dropping from 86% in 2010 to an expected 64% by 2017, causing serious concerns for oversupply." The risk of a temporary situation of oversupply is anticipated to place strong downward pressure on Ku-band capacity prices in the next three years.

Several fundamentals are supporting a strong increase in the future use of satellite communication services:

  • • The rising number of TV channels distributed over satellite with leading satellite pay-TV operators in the region diversifying into new geographic markets and the emergence of new platforms
  • • Latin America should maintain its leading role in USO programs that include satellite connectivity solutions for rural regions
  • • The availability of HTS capacity and roll-out of cost-effective services should drive consumer broadband in populated countries such as Brazil
  • • The increasing use of high bandwidth applications such as video streaming and cloud services should drive the capacity requirements in energy (oil & gas, mining) and corporate networks segments
  • • Mobile penetration keeps increasing along with the expansion of 3G and potentially 4G/LTE networks, which will create new market opportunities for cellular backhaul over satellite

Although demand is relatively equally distributed across the three sub-regions (Central America, Mexico, Caribbean; Brazil; Rest of South America), the two largest countries, Mexico and Brazil, are projected to represent more than half of total capacity demand by 2024. In the short to medium term, market growth will be hampered by the economic slowdown that should limit the progress of the middle class and may potentially cause instability or delays to government programs and funding. Furthermore, the analog switch-off process will somewhat temper the capacity additions from 2018 until 2022.