Satellite giant SES, which reportedly already controls some 49 per cent of Channel Islands-based broadband satellite operator O3b, is expected to take full control sooner rather than later.
A report from equity analysts at investment bank Jefferies suggests that SES is investing in O3b’s December 10th cash-raising funding round of €460 million. The cash will be used to support the build and launch of O3b’s next eight satellites (the company already has 12 satellites in orbit). Thales Space will build the eight, which will probably be launched on an Arianespace rocket.
Jefferies says: “In a press release from Millbank Tweed Hadley & McCoy, advisors to O3b on the funding round, we have learnt that the $460 million of funding included: 1. $184 million of COFACE debt; 2. a $31 million term loan; and 3. new equity equal to $143 million. The remaining $102 million of funding is not disclosed, but we assume is debt.”
“There has been no disclosure as to SES’s participation in the equity element of the funding,” adds the Jefferies report. “Since there was no announcement from SES that it was now consolidating O3b, we assume that it used the funding round to increase its stake from 46.9% at the time of the previous funding round (October 2012) to over 49%. We remain of the (consensus) view that SES will move to 100% control of O3b in 2016, exercising its call options [to buy].”
O3b is specifically targeting “the other 3 billion” people who are underserved (or non-served) in terms of broadband access. It currently has more than 40 live customers, mostly telcos and other capacity re-sellers. It has enjoyed considerable success in delivering high-speed broadband to consumers on cruise ships and its latest business win is with RigNet, a service which suppliers broadband to oil rigs in the Gulf of Mexico.