New Skies Satellite became the second private equity-owned satellite operator this year to launch an initial public offering (IPO) of common stock. And given the stock’s rise on its first day of public trading and its increases since that day, one could say the investment community has become more comfortable with the satellite sector.

In fact, the comfort by investors in the satellite sector is a key reason New Skies CEO Daniel Goldberg attributed the success and growth of the company’s shares following its IPO in May. In an exclusive interview with Satellite News Editor Gregory Twachtman, Goldberg talked about the IPO in relation to the perspective of current investors, as well as offering his perspective on where opportunities lie for New Skies going forward.

Goldberg also talked about industry consolidation. For New Skies, the subject of consolidation recently took center stage when Goldberg and others testified at a hearing before Congress about amending the Open-Market Reorganization for the Betterment of International Telecommunications (ORBIT) Act to remove prohibitions that currently prevent New Skies from entering into a merger or acquisition transaction with Intelsat. Goldberg also offered thoughts on consolidation across the satellite industry in general.

Satellite News: What made the timing right for New Skies to go public?

Daniel Goldberg: I think it was a couple of things. The public equity markets probably were more receptive to new issues then they have been historically. So there looked to be a good market opening. We also watched closely how Panamsat did.

There appeared to be a fair amount of appetite in the market for the satellite stories and the satellite companies, which have been subsequently borne out, I’d say, by our IPO and by Inmarsat’s more recently. It wouldn’t surprise me if others also come to the market. SES also has traded well lately.

The public capital markets have proven themselves to be pretty receptive and hospitable to the satellite companies of late. That was very much on our minds when we decided to go forward with our offering.

Satellite News: Did Panamsat’s initial drop in price give you any cause for concern?

Goldberg: You have to take a longer view and it hasn’t surprised us that Panamsat traded well in the aftermarket. We obviously watched how they did very closely. We listened as best we could to what the market was saying to Panamsat in terms of feedback and the like. We came, I wouldn’t say right on their heels, but shortly thereafter and from my perspective the markets were still very, very much open the kind of story we have to tell.

Satellite News: You mentioned other companies might follow suit by going public and taking advantage of this market that is showing favor to the satellite industry. Are there any lessons learned that you can offer to companies that might be thinking about going public?

Goldberg: Get a good night’s sleep [laughs]. Let me reflect on that. I think the good news is that the equity investors are increasingly familiar with the satellite story and anyone who comes down the path next will very much be a beneficiary of that. There are more and more analysts covering the sector again. There are more and more funds–both traditional funds and hedge funds–that are following our sector and are very [educated] in the story.

We were public once before and right now things are different. The investing community is more familiar today with the satellite business model than they were just a few years ago and I think that whoever comes next will benefit from that. I think all of us that are already out there will continue to benefit from the fact that there are investors out there that are knowledgeable about our businesses.

Satellite News: What is next for New Skies and what are you planning to do to maintain shareholder interest and confidence in your company?

Goldberg: What is next for us is in some ways more of the same, which is to say a very overriding focus on continuing to increase our utilization rates and continuing to leverage the strength that we’ve established in the markets in which we already are strong today. I think we are doing a good job of that.

Then, the next big strategic development on our horizon is the launch of our NSS-8 satellite, which we anticipate will enter commercial service in the middle of next year following its launch early next year. We are very excited about that satellite. Our focus is making sure that the satellite is delivered to us and launched on schedule, that there is a smooth transition of our customers who are using our existing satellite onto the new satellite and then focusing on redeploying our fleet and selling into the new satellite.

Also, now that we are public again, there are the traditional investor relations activities that any public company has to engage in.

Satellite News: Can you characterize the utilization rates?

Goldberg: Across the fleet, we have a roundabout utilization rate of about 60 percent. That is where we were at the end of the first quarter. That represents an improvement from where we were about a year ago. We have increased the fill rate fairly meaningfully throughout the past 12 months. From our perspective, that is showing good progress. But we have a ways to go in terms of being able to improve the utilization rate. That is something we are all very focused on.

Satellite News: What steps are you taking to make that improvement?

Goldberg: We recently announced a couple of deals for customers in Southeast Asia that we were pleased to get. Asia has been a part of the world that has been suffering from overcapacity and suffering from fairly soft demand for a number of years now. So we, like some other operators, have some available capacity serving that part of the world. That is a market we have been focusing on and I was really pleased that we have been able to translate our efforts into some signed deals.

We, and the other operators, also are continuing to focus very hard on the government services market, which is a market that continues to show strong demand characteristics.

We are seeing fairly good, steady demand in most parts of the world, with the exception of Latin America. That continues to be a market that has struggled throughout the past couple of years.

Satellite News: Is there anything that you can do specifically to get more out of the Latin American market?

Goldberg: We are already one of the leaders serving that market today. We do a very good business for video distribution in C-band. We have one of the leading data markets – VSAT distribution and the like – in Ku-band. So we are already very well established there. The struggle there has been that the economies have not been what I would describe as vibrant. We continue to talk to companies that by and large are already customers. Other than just being close to the market and close to all those customers, that is about all that we can do.

Satellite News: So it is just waiting for those economies to recover?

Goldberg: It is waiting for the economies to recover. It’s waiting for some large governmental projects that have been in the pipeline to actually come to fruition; things of that nature.

Satellite News: You testified before Congress during a recent hearing on the ORBIT Act about relaxing the requirements in that legislation that currently prohibit New Skies from entering a merger or acquisition transaction with Intelsat. Is that kind of a transaction with Inletsat something you are looking to do?

Goldberg: The reason we are calling for the removal of the prohibition is because ORBIT was passed back in March 2000 and it set certain objectives in terms of why that legislation was passed and what it was hoping to achieve. What it was hoping to achieve was the pro-competitive privatization of Intelsat, Inmarsat and the Intelsat affiliate, which is New Skies. The ultimate end goal of the legislation was to ensure that the international satellite services market is more competitive.

We are fully privatized. Intelsat is fully privatized. Inmarsat is fully privatized. The international satellite services market not only is competitive, it is vigorously competitive. We are really just calling on Congress, like Congress does from time to time when they pass legislation, to revisit the act to make sure the law is still an accurate reflection of what the market realities are. It is more than five years since the act was passed. The world today looks radically different from what it looked like then so they should remove some of the prohibitions that they put in place at the time. That is what we were driving at during the hearing.

Satellite News: Are there merger and acquisition plans coming for New Skies, regardless of whether the ORBIT Act is amended to open the door to a possible reunion with Intelsat?

Goldberg: Fundamentally, it has always been my view that there will be consolidation in our sector. That will be driven by a number of things, including the desire to rationalize some of the excess capacity out there and the desire for some of the operators to expand their scope and strengthen their position in certain markets. These are businesses that benefit from economies of scale and that is something that drives consolidation in any industrial sector where meaningful economies of scale exist.

It is our expectation that there will be consolidation in the sector and sure, New Skies will look for ways to participate in that. All of the business logic that drives consolidation for the sector more broadly certainly applies to New Skies. We will continue to monitor the strategic landscape very closely and try to position ourselves in a sensible way as that unfolds so we can benefit from all those things I mentioned with the ultimate objective of creating value for our shareholders.

Satellite News: Are there any specific targets or segments that are ripe for consolidation ahead of others?

Goldberg: There are certainly a multitude of operators out in Asia. That is a region that cries out for some consolidation. Latin America is another market that has a fair number of operators that might be a place where consolidation makes sense. Those are regions that come to mind. But even more broadly speaking, I think that there will be more consolidation throughout our sector.