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Telesat mulls sale, or IPO

November 9, 2010

Canada’s Telesat has confirmed it is looking at a possible IPO, as well as evaluating other potential options for the company. Indeed, either way, it looks like another handsome pay day is in the offing for CEO Dan Goldberg who has considerable experience of migrating satellite operators to a ‘next level’ owner. For example Goldberg oversaw the New Skies Satellite growth, IPO and subsequent sale to SES, and became a very wealthy individual in the process.

While an IPO is certainly one option, and one that’s hugely helped by the removal of the rules governing obligatory Canadian ownership of satellite operators, there’s also the distinct possibility that Telesat will be swallowed up by another operator.
In a conference call during a discussion that followed the release of Telesat’s latest (9 month) numbers, Goldberg declined to say whether there was any sort of timetable on either plan.

US-based Loral Space & Communications is the 64 per cent economic owner of Telesat – but with only a 36 per cent voting stake. The 64 per cent voting stake is controlled by Canadian pension fund PSP Investments.

Telesat declared some attractive numbers with EBITDA up from 70 per cent this time last year to 76 per cent now, helped by an 87 per cent fleet fill-rate.

The would-be–potential–buyers of Telesat include most of the usual suspects, but Eutelsat must head the list, given the appeal of Telesat’s strong North American presence. 54 per cent of Telesat’s revenues flow from video broadcasting, with 42 per cent from its enterprise network segment. Interestingly, a useful 4 per cent of revenues come from its highly-regarded consultancy division. SES would certainly run into anti-trust problems should it attempt a bid because of its ‘Americom’/World Skies operation. Besides, SES already has a Canadian stake in its Ciel satellites.

Much the same rationale might apply to Intelsat, which is also well-represented over North America via its Galaxy fleet.

The only other satellite operator of note who could mount a bid is Oslo-based Telenor, although acquiring Telesat would be a giant meal for Nordic operator. Besides most of Telenor’s focus is on Central and Eastern Europe, not North America.

However, there are plenty of other options for Dan Goldberg’s Telesat, not least selling out to a Private Equity investor. Or, simply launching an IPO as an easy route to raising cash and rewarding the current investors.

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