SES and Eutelsat Decline To Make Bids for Rival Telesat

by

PARIS — The world’s second- and third-largest commercial satellite fleet operators on Feb. 18 said separately that they have declined to make bids to purchase competitor Telesat of Canada, raising the likelihood that Telesat’s new owners will be private-equity investors.

In separate conference calls with investors, SES of Luxembourg and Eutelsat of Paris said they took an initial look at Ottawa-based Telesat before deciding that Telesat’s current owners were asking more than SES and Eutelsat could justify.

Eutelsat Chief Executive Michel de Rosen said his company, which is highly profitable with low debt and 7 percent annual revenue growth projected through 2013, habitually has favored organic growth and is unlikely to seek a major acquisition. He specifically said Eutelsat declined to make an offer for Telesat, currently owned by Canadian pension fund PSP Investments and New York-based Loral Space and Communications.

SES Chief Executive Romain Bausch said SES’s 70 percent-owned Canadian venture Ciel has given SES a foothold in Canada, which may have complicated an SES bid for Canada’s other, larger satellite fleet operator. But beyond that, Bausch said, SES has seen “aggressive pricing” by some private-equity investors interested in Telesat. The prices now being discussed, he suggested, were beyond what SES would be willing to pay even without the Ciel asset.

Finally, Bausch said, North America, where Telesat does most of its business, is viewed as one of the least promising regional markets in the coming years compared with Africa, the Middle East, Central and East Asia.

Industry officials have said Luxembourg- and Washington-based Intelsat, which by revenue is the world’s largest satellite fleet operator, has taken a deeper look at Telesat as a way of reducing Intelsat’s overall debt profile.

But one industry official who is unaffiliated with Intelsat questioned whether the price that Telesat may be able to get from one or more private-equity investors will not scare off even Intelsat. “I have seen figures of something like $6 billion,” this official said. “This is way above what a strategic investor likely would be willing to pay. If Loral [which owns a majority share of Telesat] can get this, I congratulate them.”

 

RELATED ARTICLE

SES Dials Back Revenue Forecast for 2011 and 2112