As Sale to Intelsat Nears, PanAmSat’s Profits Increase

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  Space News Business

As Sale to Intelsat Nears, PanAmSat’s Profits Increase

By PETER B. de SELDING
Space News Staff Writer
posted: 13 March 2006
11:22 am ET


PanAmSat Chief Executive Joseph Wright said his company is in better shape than ever as it prepares to be sold to competitor Intelsat in a $3.2 billion deal that is expected to close by autumn.

The Wilton, Conn.-based satellite-fleet operator reported increased sales and profit in 2005 compared to the previous year, and also paid down debt and increased the fill rate on its 23-satellite fleet to 73 percent. Wright said the industry average is closer to 60 percent.

Presenting its 2005 financial results March 9, PanAmSat reported revenues of $861 million, an increase of 4.1 percent over 2004. Adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — increased by more than 7 percent, with an adjusted EBITDA margin of 76 percent, compared to 73 percent in 2004 and 68 percent in 2001, the year Wright and the current management team arrived.

Backlog was down 8 percent, to $4.5 billion, but Mike Inglese, PanAmSat’s chief financial officer, said there were no notable defections among PanAmSat customers and that the dropoff was more a result of the timing of contract renewals. Inglese said the backlog includes $1 billion in advance sales of capacity on satellites that have not yet been launched.

PanAmSat’s G2 Satellite Solutions subsidiary, which sells capacity principally to the U.S. government, reported a 2-percent increase in revenue, to $87.6 million. When revenues from leasing an L-band navigation payload aboard the Galaxy 15 satellite to the U.S. government are removed from G2’s accounts, the core business of the division grew by 6.5 percent during the year, to $82 million, PanAmSat said.

Wright’s five years at PanAmSat have been marked by a repeated emphasis on not overbuilding. The company has ordered several small telecommunications satellites as part of its philosophy. In 2005 its Horizons joint venture with fleet operator JSAT Corp. of Tokyo ordered a second small satellite to meet surging demand in North America for Ku-band satellite services.

Wright said the U.S. market for both C- and Ku-band is likely to remain strong as the U.S. government homeland security-related initiatives lease capacity. The ramp-up of homeland security business will occur at the same time as bandwidth-hungry high-definition television expands, and as satellite operators also grow the new business of providing capacity for Internet-delivered television — known as IPTV or Internet Protocol TV.

PanAmSat’s business in Latin America, a market that is slowly rebounding after several years of difficulty, is protected by long-term contracts with direct-broadcast television providers, Wright said.

PanAmSat in 2005 purchased EuropeStar, a small satellite operator operating in Europe and the Middle East, from Alcatel of France, a deal Inglese said was valued at $42.5 million.

Comments: pdeselding@compuserve.com