Innovation and Diversity
During the past year, the challenging economic environment created considerable upheaval throughout the world. We caught up with Hughes Chairman and CEO Pradman Kaul to get his insight into how Hughes is weathering these tough times.
Channels: Considering the volatile economic conditions worldwide that are negatively impacting many companies, how is Hughes faring in this challenging business environment?
Pradman Kaul: The Hughes business model has proven to be steadfast, as demonstrated by four more quarters of results that met or exceeded all financial metrics. In 2008, we crossed $1 billion in revenues and achieved a healthy EBITDA of $155 million; plus we ended the year with a strong cash position of over $200 million. All Hughes employees should be proud that we’ve now achieved positive results for ten successive quarters since going public in 2006, as well as showing positive growth and earnings for the past four years. That said, we must all hold the line on expenses as 2009 plays out and be ready to adjust to whatever market conditions may hit us.
Channels: How do you account for this success amid the turmoil?
Kaul: Besides driving innovation of broadband technologies and products, we have a thriving service business. In 2008, recurring service revenue from a growing base of repeat customers in North America, Europe, India, and Brazil exceeded our product revenues and is growing at a faster rate. This diversity in products and services around the globe sets Hughes apart from the competition and keeps us strong.
Channels: Hughes is known as a longtime innovator, and SPACEWAY® 3 was well recognized as a breakthrough technology last year. What’s the latest business status?
Kaul: Launching commercial service on SPACEWAY 3 last April turned Hughes overnight into a fully integrated satellite service provider. And its positive effect on our bottom line is beginning to show. We now have over 128,000 HughesNet subscribers in North America on SPACEWAY 3 and are rapidly expanding our service offerings that exploit its high capacity, onboard switching, and bandwidth-on-demand capabilities. For example, we now offer consumers the highest speed satellite Internet plans available in North America—up to 5Mbps. Plus, we can deliver instant networking such as the Inter-Government Crisis Network for emergency preparedness and response. All this good news means we’re now very busy planning the next even higher-capacity satellite system.
Channels: Speaking of governments, what is Hughes doing in the U.S. government sector?
Kaul: Our selection on the U.S. General Services Administration’s (GSA) SATCOM-II vehicle and as an important player on the Networx contract team last year is beginning to bear fruit. For example, the Government Education and Training Network (GETN) selected Hughes to provide an interoperable network that enables federal agencies to share distance learning programs. Hughes is also delivering a fully managed Interactive Video Tele-training Network, which reaches more than 1,650 offices of the Social Security Administration (SSA). We’re also confident that Rick Lober, our new head of Defense and Intelligence Systems, and his team will soon be successful in generating business with our SOTM (satcomon- the-move) and related broadband solutions for the military.
Channels: What are you doing in other parts of the world?
Kaul: Internationally, Hughes is continuing to help close the digital divide and bring broadband to rural communities on every continent. Recent wins are in Brazil, India, Australia, Ethiopia, and Mexico. The Mexican government, for example, is using Hughes technology to bring Internet access to its underserved population. In India, a public-private partnership is bringing distance learning and government programs to rural locations. (For more information, see related article “Bridging the Digital Divide” in this issue of Channels.)
Channels: How do you see the road ahead—in 2009 and beyond?
Kaul: From technologies, to products, to services, Hughes is all about broadband. Our proven business strategy of innovation and diversity has held strong in both good times and bad, and our continued success is rooted in executing that strategy. I have every confidence that with the support of our top-notch customers, shareholders, and employees, we will. |