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Eutelsat in trouble in Spain?

September 27, 2013

A Spanish newspaper, in an Editorial, is extremely critical of Eutelsat’s dealings with Madrid-based Hispasat and in particular Eutelsat’s successful bid for the SatMex company in Mexico which they allege was carried out to the detriment of Hispasat – in which Eutelsat is also a shareholder.

The article in El Confidencial accuses Eutelsat of “double dealing” in its purchase of SatMex. “They have kept on their poker faces,” says the article, “but both the Ministry of Defence and SEPI (Sociedad Estatal de Participaciones Industriales), which reports directly to the Ministry of Finance, have been stunned to learn of the duplicitous conduct of French multinational, Eutelsat, in our country. The French satellite operator has snatched the purchase of Satélites Mexicanos (SatMex) from the hands of its Spanish partner, Hispasat. SatMex is a strategic company for the development of the telecommunications business throughout South America.”

The clearly well-briefed article then accuses Eutelsat of deliberately remaining silent during the period when it was increasing its stake in Hispasat as well as adding to the number of nominated directors it had on Hispasat’s board. The newspaper states that Spain’s government believes Eutelsat has “acted in an unfair way” and in so doing has scuppered Hispasat’s own plans to expand its services over South America.

The phrases used against Eutelsat the article are near-venomous and by any measure extremely strong and include “self-centred connivance” and “without shame”.

Eutelsat itself is staying silent on the spat although industry insiders suggest that the piece might well have been influenced by infrastructure company Abertis, a shareholder in both Hispasat as well as Eutelsat.  Abertis, some years ago, tried unsuccessfully to take majority control of Eutelsat and this article might just be sour grapes. Certainly it is not unusual for fellow-shareholders to have differences of opinion as to the strategic direction of a business.  Abertis, even though it has sold down much of its previous stake in Eutelsat, still holds a 5.57 per cent stake in the satellite operator.

One Eutelsat source said that the satellite operator had been instrumental in building up Hispasat from a very small country-centric operator to a wider role in the industry. Without Eutelsat’s active participation in Hispasat it might never have invested in Amazonas 1, the satellite which greatly expanded Hispasat’s footprint and capacity for the Latino markets.  It is also understood that Eutelsat, even though it ‘won’ the bid for SatMex (by agreeing to pay $1.14 billion for the asset) was not the only bidder for the company. However, Hispasat, despite its post-event negative comments, was not the ‘losing’ bidder.

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