MEXICO CITY — Satcaster Sky Latin America officially has revised its estimated startup budget to approximately $1 billion, up from the $650 million it was figuring in early 1996.
Launched in Brazil in October and in Mexico in December, Sky L.A. is backed by News Corp., Televisa, Globo and TCI Intl. and is rivaled by Hughes-led satcaster Galaxy Latin America, which has talked of an estimated startup of $850 million.
Sky chief financial officer David Torkington told Daily Variety the revision owed mainly to two factors: the inclusion of financing costs not contemplated when the initial budget was sketched and greater-than-expected marketing costs.
Sky has raised long-term debt separately in Brazil and Mexico to the tune of $575 million, of which $198 million has been set aside to service and guarantee interest payments.
“We’ve revised our estimate using the experience gained in Mexico and Brazil. This time next year there could be a different number — it could prove to be less expensive,” Torkington said.
Indeed, depending on rates of subscriber signups and future cash flow, not all of the $198 million set aside to cover interest will necessarily be used.
Torkington added that Sky’s Mexico platform (budgeted at $475 million) is more costly than Brazil’s ($265 million) partly because the former figure includes Televisa’s buy-out of local rival satcaster Medcom for around $80 million.
Some of the costs of startup in Mexico and Brazil will benefit rollout in the rest of Latin America, which will require an additional investment of about $250 million.