Israeli Satellite Services Firm Hires Investment Banker

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  Space News Business

Israeli Satellite Services Firm Hires Investment Banker

By PETER B. de SELDING
Space News Staff Writer
posted: 14 May 2007
04:19 pm ET


PARIS — Satellite-services distributor RRSat Global Communications Network Ltd. has hired a U.S. investment bank to help the company review its options for acquiring a company in the United States or Britain, RRSat Chief Executive David Rivel said.

The Omer, Israel-based company, which since November has been traded on the U.S. Nasdaq stock exchange, is weighing a geographic expansion and is reviewing potential acquisition targets in both nations, Rivel said in a May 8 conference call.

RRSat leases capacity on some two-dozen commercial telecommunications satellites for 350 television and radio customers. The company also provides some of its customers with value-added services including conditional-access systems that feature encryption for pay-television. In addition to purchasing capacity from satellite operators, RRSat has a fiber optic network in the United States.

Company revenues for the three months ending March 31 increased 41 percent, to $13.3 million. Net profit was up 68 percent, to $2.6 million. Both figures were at record levels.

Backlog stood at $119.8 million on March 31. RRSat typically signs multi year contracts with broadcasters, and the average contract length in the current backlog is three years, RRSat Chief Financial Officer Gil Efron said during the conference call.

Several satellite-fleet operators have reported that transponder-lease prices worldwide have been holding firm, with some regional exceptions. But Rivel said RRSat has not seen any increase in prices that would affect its outlook.

“There is lots of free capacity that we are able to get,” Rivel said, adding that the big satellite operators are encouraging market adoption of high-definition television because high-definition signals require more satellite transponder capacity than standard-definition. “We don’t see anything that affects our business” in terms of upward price pressure.

For a company the size of RRSat, listing on a U.S. stock exchange will add substantial costs to its operations – up to $2 million every quarter in costs associated with the regulatory requirements of a publicly traded company, Efron said.

RRSat signed 18 new contracts in the first three months of the year, of which eight were with new customers. The company’s profitable growth and cash position “provide us with the resources to continue to grow and take the company to the next level,” Rivel said. He did not give an estimate of when an acquisition might occur.

The company has slightly raised its forecast for 2007 revenue, to as much as $66 million, which would represent a 52 per cent growth over 2006.