Eutelsat CEO Discusses CIC Investment, GE-23 Acquisition, Ambitions in Asia

   If that wasn’t enough, Eutelsat’s ambitions in Asia took a massive step forward when the operator acquired the GE-23 satellite, associated customer contracts and orbital rights from GE Capital for $228 million. The move makes Eutelsat a much stronger player in some of Asia’s lucrative Far East markets. In his first interview since the GE-23 deal was announced, Eutelsat CEO Michel de Rosen spoke with Satellite News about how these latest developments would affect the company’s future.

 

de Rosen: We were informed last week that Abertis decided to sell 7 percent of its stake in Eutelsat to CIC. This represents approximately half of the investment that it had retained in Eutelsat following the sale in January of 16 percent of its stock. I believe there was no surprise to see Abertis reduce its stake. What does this change for Eutelsat? Nothing from a strategic, management or governance perspective as CIC is a passive investor that will not be joining the board. They, like all other shareholders, will not influence the operations of the company and will simply have access to the financial information that we disclose as a publicly quoted group. In terms of strategy, we have a clearly identified roadmap proposed by the management team and validated by the board. As you know, growing our presence in Asia was one of our objectives going forward because it is a region with promising potential for growth. This has been a long-term goal and we will continue to work on it in the years to come. In short, we are running the company today as we were before the Abertis transaction and will continue to do so going forward.

 

de Rosen: We have shareholders from all over the world, some of whom have shared their views on their markets. We are always ready to listen.

 

de Rosen: For many years, we have expressed our interest in increasing our presence in the fastest growing markets in our industry. We have a strong presence in what we call the ‘second continent’ — Central and Eastern Europe, the Middle East, Central Asia and Africa — and this gives us growth potential for many years to come. We have also said we would like to increase our presence beyond the Middle East and Central Asia into Far East Asia and also to Latin America in a way that doesn’t sacrifice our focus on shareholder value and profitability. It is not growth at any cost.

   With this mindset, you sometimes have to refuse opportunities and we have refused some both in recent and less recent times. We were, however, immediately interested by the GE-23 opportunity as we see this asset as a good fit for our objectives to grow in Asia. It will complement Eutelsat 70B, to be launched later this year, in the Asia Pacific region and is a flexible satellite in good technical shape. The transaction also includes the business as well as the 172 degrees East position. From a business perspective, we were interested for all of these reasons. We presented our offer, became the finalist, did our due diligence and negotiated a deal. The final agreement was on good terms for Eutelsat and is expected to be accretive to EBITDA margin and EPS in year one. Now we are working on the closing, which I hope we will complete in the third quarter this year, and on integrating the satellite into our fleet, at which point it will be called Eutelsat 172A, with a smooth transition for all customers.

 

de Rosen: We believe that the Asian market will grow in the three businesses that make up our portfolio. There will be continued growth in DTH, growth in data and broadband and growth of government services. GE-23 already has a presence in data and broadband as well as government services. The GE-23 team is an excellent one with a proven track record of attracting business and we hope they will be interested to join us and reinforce our overall effort in the Asian market. They will help us work on opportunities for further growth including in DTH, which remains and will remain the number one opportunity of new business in Asia for many years.

 

de Rosen: We are not currently working on a plan for a Ka-band initiative in Asia, however, we do believe that Ka-band has a future worldwide. If we think long-term, most operators will have to use Ka-band, as C-band will become more and more congested, and because the path to grow in Ku-band is limited. So, long term, there is a future for Ka-band across the world.

 

de Rosen: During our first interview in 2009, I said that it is not my goal to do things differently from my predecessor — it is to do as well as my predecessor. Secondly, companies move in an environment that is constantly evolving. You can’t do everything at the same time but if you do nothing, you die. In this context, Eutelsat in the 1990s was smart enough to identify emerging markets as a potential source of growth. We saw the opportunities before others even though some said that it was risky. In that sense, we are continuing a trend, which is to pursue expansion to two very promising regions: Asia and Latin America. By doing this, I believe we are doing it in a way that combines energy and wisdom. If you are overly energetic, you risk making mistakes and overspending. If you are over-wise, you procrastinate and do nothing. I can tell you, since I joined the company we have been working hard on ways to develop the Latin American market and increase our presence in the Far East. I don’t see these moves as bold, but I see them as important for Eutelsat. I think they are well-thought, good moves that also respect our goals of shareholder value. In parallel, there has been continued investment in new satellites for our historic markets. What it really means is that this is not a revolution of Eutelsat’s strategy. The focus on DTH, data and broadband and multi-usage is here to stay, as is our focus on organic growth. We continue to look for the optimal balance between growth and profitability.