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By Grand Barber, Executive Vice President and Chief Financial Officer of Hughes
In this issue, we speak with Hughes Executive Vice President and Chief Financial Officer Grant Barber about the company’s major milestones in 2015 and ask him to detail what we can expect in 2016 and beyond.
Q. Last year saw a long list of major achievements for Hughes. Can you summarize the key financial results and how it positions the company for 2016 and beyond?
A. Hughes finished 2015 with another record year in both revenue and earnings. Revenue was $1.35 billion—a first in Hughes history. Earnings also grew, at a faster pace than the year-overyear revenue, which we’re very proud of. As a finance person, you look to grow earnings and generate cash faster than revenue. And as a leader in the satellite industry, it positions us well into 2016 and beyond, because we can leverage that with some of our new initiatives.
Q. Which major milestones from 2015 or expected in 2016 are most notable?
A. Our consumer business is the largest revenue driver and has the highest visibility. In 2015, we crossed a significant milestone of 1 million HughesNet® subscribers in North America. But all three of our other businesses—International, Enterprise (which includes government) and Mobile Satellite—were success stories in 2015, with significant long-term orders and bookings. That confirms our ability to compete and win across all market sectors globally, which bodes well for 2016 and the coming years.
Looking to the near future, the launch of Echostar XIX later this year—with over 180 Gbps capacity—will add significant capacity to grow the North American market, including solid partners in both Canada and Mexico. And the recent successful launch of Eutelsat’s 65W satellite—of which we have leased all the Ka-band payload—sets the stage for us to launch HughesNet consumer broadband service in Brazil during the second half of 2016.
Q. With Hughes launching HughesNet services in Brazil, can you address how long Hughes has pursued this initiative and the type of investments or partnerships required to make it happen?
A. Hughes has steadily built a successful enterprise business in Brazil since 2003 and now has the necessary network operations and customer care to tackle the consumer side. The market demand on the consumer side is clearly there for the taking; and the final needed step culminated last year, with availability of the required Ka-band satellite capacity from a trusted partner and with the ability to launch the service from a regulatory point of view.
Our goal in Brazil is to replicate our successful North American model, where we have retail operations that sell direct, together with a series of wholesale partners, dealers, and agents to reach critical customers we may not be able to reach directly. That model is being established with chosen partners as we speak.
Q. Hughes is both a leading broadband technology and services company. Can you describe the company’s long-term strategy and how it drives ongoing success in both dimensions?
A. If you look back at our history, we were satellite-based. We’ve evolved, as have our customers’ demands and networks. Today, with HughesONTM, we’re able to provide hybrid services, which may include terrestrial and satellite capability, bandwidth management, and failover network management. The compelling benefit to our customers is there’s one throat to grab—one contractual commitment, one bill, and one quality of service, regardless of the access technology. That’s a significant advantage that Hughes offers our customers, domestically and around the world.
Q. Your financial team has been instrumental in helping to grow Hughes and EchoStar overall. Can you tell us more about your team’s composition, strengths and the vision for your organization?
A. We have a unique model. Each one of the business groups has a finance prime who works for them under my guidance. That resource provides financial leadership; and enables the business group leaders to have a key person on their team who can ensure they have all the financial aspects required for their quotes, costs, projections, and activities.
Because Hughes is a multi-billion dollar company serving a diverse base of customers in over 100 countries, my team has tremendous opportunities to move up within the various functions or move across to something new. For example, if you cut your teeth in manufacturing, then roll to International, and on to the Enterprise area, you gain a different perspective and breadth of experience. Each team member has that opportunity at Hughes without having to face a career dead-end and leave the company to gain that expertise.
Q. For the past several years, Hughes has had healthy growth in both sales and profitability. Looking forward to the next 5-year plan, what would you say are some of the key factors to ensure continued success?
A. One key factor is change. When we handle network management for a customer on a typical 3 to 5 year deal, it’s a certainty that there’s going to be significant change as technologies and applications evolve. Digital signage is a good example. A few years ago, our customers had no idea what it was. Now, they realize that with Hughes as their key partner, we can bring in both customer-facing point-of sale training, inventory management, and employee training, or breakroom TV—all on the same platform. And, we can reduce their overall bandwidth management and costs. This wide range of benefits embeds us into their business fabric and keeps them a happy Hughes customer.
There are many other such product and service related innovations that our stalwart engineering and marketing teams are always working on—too many to talk about here. But that factor of innovation is what defines us and is why Hughes continues to be the leader it is. And with being part of the EchoStar family, we are now also expanding the opportunities to team together. For example, on the EchoStar Mobile initiative in Europe, Hughes is building part of the ground infrastructure. Brazil is another example of joint activity. And Sage by Hughes, the novel home security system developed by EchoStar Technologies, is being launched this year with heavy Hughes involvement from the back-office area to the planning and development of the business. These teaming initiatives open ever more horizons of opportunity and fuel further growth for both EchoStar and Hughes.