Does Drahi have Plan B for Eutelsat?

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Patrick Drahi might not have William Shatner in his portfolio of headline-grabbing assets, and rich as he is, Drahi certainly cannot compete with the likes of Elon Musk or Jeff Bezos in terms of cash-at-hand.

But few will be surprised if Drahi doesn’t now come up with a Plan B to acquire Eutelsat.

Certainly his bid last week with a 17 per cent premium to Eutelsat’s (then) share price would have been the bargain of the decade had Eutelsat’s board accepted it. But, according to the FT, the general feeling in Paris is that Drahi will return with an improved offer.

Moreover, says the FT: “It might not take much to convince directors to recommend handing over the controls”.

Most observers recognise that consolidation is needed in the satellite industry, and those same observers have long said that the pairing of SES and Eutelsat is wholly logical.

The question for Drahi’s scheme is whether he can muster up a financial package that has echoes of his engineering to create his portfolio of telco and cable assets in the attempt to bring Eutelsat into his stable.

One of Drahi’s problems is that while he has reduced his €51 billion of debt (back in 2017) somewhat, the price of his US Altice shares is still below their IPO value.

Now might also not be the idea time to extend those debt levels. Intelsat is still going through its bankruptcy reconstruction while OneWeb is now in a good place – but having written off $3 billion in pre-bankruptcy reconstruction.

The FT suggests that Drahi will do what he – and others – have long done: shake up management, slash costs somehow, boost the company’s own debt borrowing and take for himself a hefty dividend.

Key to all these manoeuvrings is the French state which holds a near-20 per cent of Eutelsat’s shares. Do they consider Eutelsat a national asset to be protected at all costs? Time will tell.


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