Analyst: Era Of Large Satellite Mergers Over
[12-07-07 – Satellite Today] With Loral Space and Communications and the Public Sector Pension Investment Board (PSP Investments) completing their acquisition of Telesat Canada, the consolidation of the largest fixed satellite services operators most likely has closed, and future deals in the fixed satellite services space may be too small to attract much interest from private equity firms, Hoyt Davidson, CEO of Near Earth LLC, said.
“There’s not a lot more you can do in the [fixed satellite services] unless the current large global players start buying the smaller national and regional players,” Davidson said at a presentation, “How Are Private Equity Firms and Investors Shaping the Satellite Industry,” sponsored by the Society of Satellite Professionals International in Washington Dec. 7.
Those options most likely also are limited, as the regional operators continue to be supported by governments that seek the prestige of owning their own satellites,” Davidson said. “I think it’s getting hard now that you have people making smaller geostationary satellites you can get up for $100 million instead of $200 million or $300 million, so some countries will use those to again get their own satellites in orbit and be part of the spaced age for a lot less than it used to cost. I’m not sure how much more consolidation there may be for the private equity firms to fund.”
Satelites Mexicanos S.A. de C.V. (SatMex), Mexico’s predominant satellite service provider, remains on the block as a potential large acquisition, but the government suspending the sales process in June because it did not see any offers that were compelling enough. French-owned Eutelsat Communications had submitted an offer with two Mexican partners, Miguel Aleman Group and Clemente Serna Group, for 100 percent ownership of the Mexican satellite operator.
“SatMex eventually will happen, but the Mexican government knows what it wants and didn’t see it, so they will wait,” Davidson said. “I think Eutelsat probably needs to do an acquisition over the next year or two to catch up with the global presence of Intelsat and SES, but these will be much smaller deals than what the private equity universe is interested in.”