earlier this year, ses was
unsuccessful in bid to acquire assets
owned by Israeli satellite operator,
Spacecom. The move showed that
despite an abundance of activity in
recent years there are still potentially
deals to be made as operators look
to improve their global coverage. So
where might be the next level of deals
be done and who will they involve?
“I think there are a few possibilities out there,” says Mathieu Robilliard, a satellite equity analyst at Exane
BNP Paribas. “You have Hispasat, for
example. There is Hellas Sat that could
be a target one day. There are a few
things out there but these are likely to
be relatively small deals.” Eric Beaudet, a satellite equity analyst at Natixis
Securities adds, “SES and Eutelsat are
interested in possible acquisitions, so
I believe both operators will look to
do some things. But having seen that
a couple of deals have failed, such as
Eutelsat’s bid for Satmex and SES’s bid
for Spacecom, it shows that they will
only do things at the right price.”
With SES and Intelsat established as
the two major forces in the fixed satellite services (FSS) world, one of the key
questions in the consolidation space is
whether Eutelsat will look to bridge the
gap on these two. Maury Mechanick,
a counsel for Washington-based law
firm White & Case, believes there is
“compelling logic” to a possible combination of Eutelsat and Telesat. “They
are essentially the number three and
four global players but each lagging
far behind Intelsat and SES. Also, their
footprints are quite complementary. In
my mind, it is not a matter of if, but
only when.
However, Hoyt Davidson, president of Near Earth LLC, believes such
a combination currently is unlikely currently. “A Eutelsat-Telesat combination
would make for a strong third player
and support more global ambitions, but
it would be expensive and difficult in
today’s tight credit markets. It would
probably also require a spin-off or separate transaction to keep [Space Sys-tems/Loral] in U.S. hands.”
While not commenting directly on
a possible link-up, both Dan Goldberg,
CEO of Telesat, and Giuliano Berretta,
CEO of Eutelsat, see potential synergies between the two operators. “We
were certainly interested in Telesat
when it was on the market a year ago,
although Loral’s offer was too good to
be refused,” says Berretta. “Any collaboration with Telesat could be profitable in the future as I think we are very
complementary. With Dan Goldberg, I
think we could do many things together.” Goldberg adds, “Eutelsat has a very
strong business built around their Hot
Bird assets serving Europe. Telesat has
a global business but with a particular
strength in terms of [direct to home] in
North America. Telesat and Eutelsat are
complementary businesses that would
fit together well, but I would say that
Eutelsat has a lot of growth opportunities that they are pursuing. I watch
what they are doing with great interest,
including their Ka-band activities and
their S-band plans.”
Abertis, the Spanish infrastructure
company, also could play a crucial role
in future operator consolidation. The
company acquired a 32 percent stake
in Eutelsat at the beginning of 2007 and
recently received approval from the
Spanish government to proceed with
the acquisition of a 28 percent stake
in Hispasat that would make Abertis
the largest shareholder in the Spanish
satellite operator.
Kristof Samoy, a satellite equity
analyst at KBC Securities, believes
these moves could lead to a merger
of Eutelsat and Hispasat. “While the
Spanish government currently opposes
a merger with Eutelsat, a separation of
the Spanish defense satellite business
might eventually result in a full-blown
merger,” says Samoy. “The latter would
yield important cost synergies in satellite procurement, launch services and
insurance. On top of that the European
and African foot print would be expanded to Latin America.”
But Tobias Martinez, managing
director of Abertis Telecom, discounts
that idea. “Both companies have differ-
ent shareholders, but from our point
of view, we as Abertis Telecom could
improve the growth of both companies
by playing our role as an industrial partner,” he says. Abertis Telecom would
“continue to assess opportunities that
emerge in the market and that fit with
its business approach,” he says.
Beaudet adds, “The Socialists have
won power in Spain, so I don’t think
anything will now change in terms of
Hispasat. If the Right had won power,
they perhaps would have been more
interested in selling some shares to a
French shareholder. There will be some
more consolidation coming, but it is
very difficult to say who it will be. It
will probably be small actors.”
regional Plays
Rather than focusing on further
consolidation of the largest operators,
Berretta believes the next round of
transactions would see big operators
picking regional assets. “There will be
certain assets that come on the market
which could add greater scale to our
business,” he says. “After a major wave
of consolidation in recent years the only
thing that will remain will be smaller
players who don’t have the dimension
to compete effectively or large players
that may offload some of their in-orbit
assets. I think there will be some of
these types of assets on the market in
the short-term future. We will analyze
what comes on the market and look
carefully at what brings synergies in
terms of frequencies, orbital locations,
business opportunities and overall
profitability.”
Along with Eutelsat, SES could be
one of the more active players in these
types of deals, says Robilliard. “I think
SES is generally looking to increase
its size and complete its coverage,” he
says. “I think they will be looking at
adding orbital positions that they don’t
have. SES wants to get bigger and there
are always some synergies by merging
with smaller companies. I think SES is
pretty open to any region. Both Eutelsat
and SES have gaps in terms of where
they want to get stronger. Eutelsat is
