SES dismisses Intelsat: 'too much debt'

Chris Forrester

Intelsat and SES are the world’s two largest satellite operators, and up to now relations between the two rivals have been friendly. That ceased last week when at an SES investor day presentation in London, SES told analysts and investors that Intelsat was burdened by a huge debt load.

SES is best known for its Astra and Americom divisions, while Intelsat operates its own as well as the Galaxy-branded satellites over the US.

SES president/CEO Romain Bausch told the audience that over time SES’ own more modest debt obligations would compare very favourably with those of Intelsat and enable SES to “outlast” Intelsat as Intelsat’s capital expenditure limits would be under pressure.

"The main driver of concentration in our industry will [be] the need of the current owners of the large satellite operators,” said Bausch. “To be very clear: Intelsat is today capital constrained because of its [leveraged buyouts]. There is only one objective of the current owners of Intelsat: to prepare a profitable exit from that business. They are private-equity funds and their mission is not to remain shareholders of a satellite operator for 10 years. So there might be consolidation in our sector because of the shareholders of one of the two large satellite operators — namely Intelsat — having to exit. This is much more important for the discussion about landscape and concentration than the current crisis."

Bausch quoted an SES study that estimated its own fleet would expand at about 4% per annum, while Paris-based rival Eutelsat would grow at about 2.5-3% annually. Meanwhile, said Bausch, Intelsat would reduce its fleet by some 2.5% pa.