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In a transaction signed in February, which was approved by regulatory authorities on June 8, 2011, EchoStar Corporation acquired all the assets of Hughes Communications, Inc. EchoStar is well known as a leader in satellite operations and digital TV solutions that enhance today’s home entertainment lifestyle, complementing Hughes as the world’s leading provider of satellite broadband technologies and services for home and office. The combined companies create a global powerhouse in satellitebased digital video and broadband solutions and services. Channels recently caught up with Hughes Chairman and CEO Pradman Kaul to get his insight on the integration of the two companies and the outlook for the future.
Channels: How is the integration progressing?
Pradman Kaul: It’s proceeding extremely well and we’ve begun operating as a single company in many areas. The focus is on combining our respective strengths to make the collective sum greater than that of its parts.
Channels: What can you tell us about some of the joint projects that Hughes and EchoStar are working on?
Kaul: Some projects that we’re working on together include using EchoStar’s AMC 15 Ka-band satellite for our HughesNet® service to increase profitability. Our SPACEWAY® 3 satellite is approaching 500,000 subscribers and filling up fast, so having this EchoStar satellite available for our consumer business in the U.S. is very timely and will mean we can avoid paying for satellite capacity elsewhere while we wait for Jupiter™ to be launched, which I’m happy to report remains on schedule for the first half of 2012.
Secondly, as part of the EchoStar team, we’re helping Dish Network implement the Blockbuster strategy, which is to bring movies-on-demand via streaming over our HughesNet service. That’s an exciting story, and we are working hand-in-hand with many people at both EchoStar and Dish to make that a success.
In addition, we’re working with EchoStar and Deluxe Digital Cinema on an exciting new venture to launch a satellite distribution network that will deliver digital cinema content to digitally equipped theaters in the U.S. and Canada. The venture, known as Deluxe EchoStar, LLC, has already signed several of the top ten theater exhibitors in North America, and Hughes is well under way with satellite installations that will distribute digital movies to several thousand screens. The new system, which consists of a two-way satellite system and additional theater-specific receiver equipment, is capable of sending movies and trailers directly to theaters, making reels of film a thing of the past. The satellite network also supports a growing Live Event business that allows patrons to enjoy content such as live concerts and sporting events in the comfort of their local theater. Hughes, EchoStar, and Deluxe are also working to bring these same capabilities to theaters in other regions around the globe as digital projection systems become more common internationally.
Another project that’s gathering steam is Hughes becoming part of the Wholesale Dish Network offering. It means our HughesNet service will be bundled on a wholesale basis for Dish distributors and resellers, leveraging that extensive network to sell our high-speed satellite Internet service. We expect that the volume of new HughesNet subscribers signed up by Dish Network will be significant, and represents one of the most effective ways to fill up our JUPITER satellite next year.
Channels: How did Hughes do in the third quarter?
Kaul: All of Hughes business units are firing on all cylinders, and we’re on track to meet our expectations for the year. Our consumer business continues to lead the way, with now over 620,000 HughesNet subscribers in North America, over 70 percent of which are on SPACEWAY 3. Notable domestic enterprise orders included Rite Aid, Sonic, M&T Bank, YUM, and several others.
Internationally, we’re continuing to experience solid growth across our service businesses in Europe, Brazil, India, and China, and made good progress on key strategic opportunities with Telefonica in Latin America, NBN Australia, KACST in Saudi Arabia, and SCT Mexico.
Some other highlights are a frame agreement with Fintex in Nigeria for equipment supply on a government network and a contract with the African Development Bank. We also completed shipments to Yahsat for the first four gateways and 240 initial terminals of a major Ka-band initiative, helping them prepare for their service launch early next year across the Middle East and Africa regions. And in India, we installed the 50,000th VSAT from our shared hub in Delhi.
Channels: What is your outlook for the future?
Kaul: Our domestic, consumer, and international businesses are all doing very well, and the demand for broadband continues to grow at healthy rates around the globe. As in the past, continued success is in our hands and comes down to the people. Throughout the year, the company has once again been recognized with numerous awards—12 at last count—across all spheres of technology, product development, sales/marketing, and community service, which is a testament to the innovative spirit and quality of our people. That’s our most important asset and it bodes well for the new combined company as we build the future together.
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