Charlie Ergen’s EchoStar Satellite Services (ESS) operation is abandoning its DTH efforts over Brazil, and taking a $65 million hit by recognising that its $80 million investment in 2011 for DTH rights from the 45 degrees West orbital slot serving Brazil has not worked out.
The news emerged from EchoStar’s conference call with analysts, when Ergen’s team unveiled their Q4/2018 results. CFO Dave Rayner said that the company had struggled for some years to find a suitable client at 45 degrees East. “We determined that plan will not be successful and accordingly have recorded an impairment expense of $65 million in Q4. We intend to redeploy EchoStar 23, which is located in that slot to a revenue producing role.”
Overall, EchoStar (including its Hughes Network Services division) enjoyed quarterly revenues of $531 million (up 5 per cent).
But while Brazil may have turned out to be a DTH turkey, EchoStar’s Hughes division and its consumer broadband profitability is said to be in Brazil to be approaching the 50 per cent-plus profit margins of the US business. Hughes’s Q4 revenue of $445 million was up 10 per cent from a year ago; EBITDA was up 12 per cent, to $148 million.
Hughes has partnered with Yahsat of Abu Dhabi to deploy Hughes’ broadband hardware for connectivity to Yahsat’s Al-Yah 3 craft.
Hughes boss Pradman Kaul also said that its giant Jupiter-3 satellite, being built by Maxar/SS-L will enter service in 2021, and helping provide considerably more broadband capacity over the lucrative North American market. Kaul said that as at December 31st the company had 1.36 million subscribers to its HughesNet service. “Increasingly, much of our subscriber growth is coming from South America and we expect this trend to continue,” Kaul added. “Yes, the ARPU is lower than in North America, but it’s still a very good market. We make good margins.”
Hughes is also extremely active in the airline connectivity sector, delivering broadband to passengers. It is in a partnership with Global Eagle Entertainment and which has equipped 1100 aircraft.