Merger of 2 US satellite TV giants to boost RP’s BPO sector

The merger of DirecTV Group Inc. and EchoStar Communications Corp. – the two dominant direct broadcast satellite (DBS) subscription TV providers in the US – would give the Philippines’ business process outsourcing (BPO) industry a big boost, Catanduanes Rep. Joseph Santiago said.

Santiago, a former chief of the National Telecommunications Commission, made the statement a day after Citigroup Inc. boldly predicted that rivals DirecTV and EchoStar would soon merge, and that the union could result in annual operating cost-savings of up to $3 billion for the surviving entity.

In 2003, Englewood, Colorado-based EchoStar attempted but failed to acquire El Segundo, California-based DirecTV because of anti-trust issues.

Both DirecTV and EchoStar, with almost 28 million in combined subscribers, have already relegated some of their call center operations to more cost-effective outsourcing specialists in the Philippines.

DirecTV subscribers are serviced in part by ClientLogic Philippines Inc. call centers in Pasig City and Baguio City. EchoStar subscribers are serviced in part by Parlance Systems Inc.’s call center in Makati City.

In March, shortly after the merger of ATT Inc. and BellSouth Corp., Santiago had said the ongoing consolidation of US telecommunication and pay-TV service providers would lead to more customer care and technical support call center jobs being offshored to the Philippines.

Large business combinations create redundant back-office functions and provide the surviving entities the opportunity to outsource thousands of non-core, information technology-enabled service jobs to lower-cost locations such as the Philippines, according to Santiago, House transportation and communications committee vice chairman.

The country’s booming call centers are expected to have 300,000 seats, fully employ 506,500 Filipinos and produce up to $7.3 billion in annual revenues by 2010, according to the Contact Center Association of the Philippines.

With 15.5 million subscribers, DirecTV is the largest DBS subscription TV provider in the US. Controlled by media mogul Rupert Murdoch’s News Corp., DirecTV has a market capitalization of $21.5 billion. It posted $13.4 billion in 2005 revenues.

EchoStar is the second largest, with 12.3 million subscribers. The company has a market capitalization of $14.7 billion. It reported $8.7 billion in 2005 revenues.

EchoStar is currently working out a three-way joint venture with Philippine Long Distance Telephone Co. and GV Broadcasting System Inc. for the launch of a new DBS service in the Philippines by yearend.