Profile: Double the Challenge

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  Space News Business

Profile: Double the Challenge

By LON RAINS
Space News Staff Writer
posted: 14 May 2007
03:55 pm ET


Patrick K. Brant

President and CEO, Skyport Global Communications Inc.




W hen Patrick Brant left satellite operator Loral Skynet in late 2006 after that division of Loral Space and Communications merged with Telesat Canada, he was mentally prepared for retirement, having had a long and successful career in the satellite communications industry.

But Brant kept a hand in the business by doing consulting for companies like the Balaton Group, a Canadian private-equity investment firm that re-engineers — or as the company likes to say, “rearchitects” — undervalued companies. In a typical scenario, Balaton buys an underperforming business, makes any needed management changes, refocuses its business plan and recapitalizes it as necessary.

Balaton asked Brant to help restructure Skyport Global Communications Inc., a Houston-based teleport operator that provides secure satellite and terrestrial broadband services. Skyport’s client base, located almost entirely in the United States, includes military and civil government organizations and commercial customers like Sysco, a Houston-based food services firm with 175 locations throughout North Amercia .

When Skyport Global went into bankruptcy in November 2005, its largest investor — a small Louisiana-based local telephone carrier called CenturyTel that had just been purchased by the much larger Alltel — was eager to get out of the satellite business, Balaton President Robert Kubbernus said in a telephone interview.

“CenturyTel, ran out of steam and did not want to reinvest,” Kubbernus said . At the time Skyport needed another $5 million on top of the $25 million that had been invested since 2002, he added.

So CenturyTel sold out to Balaton, which eventually decided that its consultant was the best candidate to take the reins of its new property . “It all comes down to people. We were very impressed with Pat’s history and his credentials,” Kubbernus said.

Brant has worked in a wide variety of satellite communications businesses, giving him experience in senior management, mergers, acquisitions, finance, sales and operations. In addition to Loral Skynet, his former employers include Controlsat, a pioneer in low-orbit communication services, American Mobile Satellite Corp. and Loral Cyberstar .

Brant, whose company was recently named the fastest-growing teleport operator in 2006 by the World Teleport Association, spoke with Space News Editor Lon Rains just days before he started his new job May 1.


What made you want to take this job?

I really was ready to become a gentleman of leisure, but this opportunity got me excited when I was a consultant. It is an exciting time to be in this market.

The top three tiers in the satellite industry are the satellite operators, the integrators and the infrastructure companies like Skyport that have teleports and land line hubs.

The operators already have consolidated and are now a four-company universe with Eutelsat, Loral, SES and Intelsat. We’re starting to see consolidation among the integrators — Arrowhead, Skylink, Artel and a lot of smaller organizations with $10 million to $30 million in annual revenue. It’s hard being successful in that space. You need the same infrastructure; you need scale to fill the pipes.

In that third tier there are small companies that can develop solutions easier and organic growth can happen easily. This teleport is doing some excellent things and it is known for its service to its customers.

Consolidation has been a very good thing for the satellite industry. That middle sector area of integrators has a lot of opportunities.

What is your mandate from the board?

The plan is to double revenue every year. In 2006 revenue was about $10 million. In 2007 it will be $20 million. We will look to similar growth in 2008. There are already organizations that are doing in excess of $100 million a year so for the next five years we see good compounded growth rates.

When Loral was at the height of the bankruptcy, we stabilized the company, made sure we maintained our customers and right-sized the organization for the fleet we had. We automated to make us more profitable in a hurry, and developed a plan to grow with additional satellites, which is what we did when we finalized the Telesat deal in December.

I have a mandate to do the same kinds of things here: make sure we are sized correctly, automate for efficiency and provide customer service that is second to none. There will be additional pieces to be integrated. The teleport is one, but it will have new software applications that are meaningful to customers, integrated management technology and video capacity that is helpful for public safety and Department of Defense and commercial applications.

How do you plan to accomplish your growth goals?

It will be a combination of organic growth and acquisitions. Acquisitions will play a big role in this growth. We are developing those targets now and doubling every year is not an outrageous view. Within the first year we would expect to make several acquisitions.

What kinds of changes have already been made?

Lots of changes have been implemented on Balaton’s watch. They sent a person on their board, Bill Hutchison, who made a big change in the sales approach by establishing an outstanding reseller program that has had a big effect on the business. He got them into a solutions-based sales approach. With the introduction of the reseller program we have 100 to 125 people on the street and have signed up a number of organizations that are talking up our services.

What additional changes will you need to make?

We need to invest in some new technologies. We have the expertise we need on a small scale today, but we are going to be hiring people as we go forward. It will be intelligent growth — we’re not going to grow just for growth’s sake.

At the highest level — video data, broadband, voice — we’re going to take those things and get to applications that users need. With broadband, for example, you have to be able to integrate quickly and be able to reliably get behind the customer’s firewall. They get very antsy about that. With the right software and partners and services you can inspire them to work with you to have that connectivity behind the firewall they would not get otherwise.

What percentage of your customer base is inside the United States and how
much of that base is government
customers?

The business is primarily a U.S. business — 85 to 90 percent. The government part of that is 30 to 40 percent.

As you move forward and grow are you going to be competing with your vendors?

We won’t compete with operators. Those companies focus on flying satellites and leasing capacity. They have networks and platforms that allow multiple companies to plug in. I don’t think that will be an area of competition .

The operators want to be operators. The guys on the third tier don’t get close enough to the customers. In the second tier, we may run into them.