Advanced Television

Eutelsat buys SATMEX

July 31, 2013

By Chris Forrester

Paris-based Eutelsat is currently the third-largest in the world (after Intelsat and SES) but is determined to expand. This time last year it expanded to the East acquiring a satellite business that focussed on the Far East and part of Australia. On July 30th it announced it would build a giant satellite (Eutelsat 65 West A) to serve the Latin American market, and in particular Brazil, from a recently awarded orbital slot at 65 deg West, and today (July 31) it is buying Mexico’s SatMex system.

Eutelsat is paying “an enterprise value of $1.142 billion” for Satélites Mexicanos, S.A. de C.V. (“Satmex”) which – by any measure – will mean that Eutelsat is now a major player over Latin America. In hard cash Eutelsat is paying $831 million, and is absorbing Satmex’s net debt of $311 million.

Satmex operates three satellites at contiguous positions, 113.0° West (Satmex 6), 114.9° West (Satmex 5) and 116.8° West (Satmex 8) that cover 90 per cent of the population of the Americas. The company benefits from frequency rights in C and Ku-bands and was granted Ka-band rights in 2012. It has an 11 per cent market share in Latin America where it enjoys a strong franchise in corporate data networks and cellular backhaul. Last year (2012) Satmex generated revenues of $111.8 million and EBITDA of $89 million.

This is all good news – especially for Satmex, and its owners. The company exited bankruptcy in May 2011 helped by a $325 million loan. Back in 2010 Denver-based Echostar was close to doing a deal to acquire Satmex, although at the end of the day Echostar boss Charlie Ergen walked away from the deal grumbling that Satmex’s bond-holders were being too demanding.

Eutelsat also released its end of year (to June 30) financial report after the market closed on July 30th, and the ‘success’ message was stressed in line after line of positive news. The message was needed to counter what was in effect a profits warning in the previous quarterly report. But this time Eutelsat pressed all the positive buttons, saying: Revenues up 5.1 percent to €1.284 billion; “high level of profitability” with EBITDA of almost €1 billion (€995.3 million), a margin of 77.5 percent; an order backlog that stands at €5.4 billion (up 2.5 per cent) and worth 4.2 years of revenues, and perhaps the best news of all for investors, that it was increasing its Dividend payout by 8 percent to €1.08 a share.

Eutelsat admitted that this year’s revenue growth is not brilliant (at 2.5 per cent) but that the upcoming two years would be at an average growth of over 5 per cent until June 2016.

The official line from CEO Michel de Rosen, however, did deliver a warning: “Our industry is continuing to grow, albeit at a lesser pace than in the past decade. Several markets are still developing at a high pace – notably Russia, Central Asia and Africa, where we already enjoy strong positions, and Asia Pacific and Latin America, where we are actively developing our footprint, both organically, with, for example, the procurement of Eutelsat 65 West A.

De Rosen added that “targeted acquisitions” remained a clear objective for Eutelsat. “Our focus will be on expanding our presence in the markets and applications with the highest potential for growth on the back of a targeted fleet development plan, complemented where appropriate by external growth opportunities,” he added.


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