July 19, 2005
PanAmSat Is Buying Satellite to Serve More Overseas Markets
By KEN BELSON
NY Times
http://www.nytimes.com/2005/07/19/technology/19bird.html?pagewanted=print
PanAmSat, the world's fourth-largest wholesale satellite operator, is to
announce today that it bought a satellite and two orbital slots from
Alcatel to expand its coverage further into Europe, the Middle East, Africa
and Asia.
PanAmSat, based in Wilton, Conn., distributes video programming and data
services for companies like Comcast, Walt Disney and Time Warner. Its
satellites are mainly over the United States and the Pacific and Indian
Oceans. It is trying to increase its coverage in faster-growing regions.
The company will acquire the Europe*Star 1 satellite, which was launched
five years ago, giving PanAmSat a total of 24 satellites. The company did
not disclose the cost of the deal but said it expected to use cash already
on hand to pay for it.
Within the first year, PanAmSat expects the new satellite to generate up to
$15 million in annual profits adjusted for debt and other expenses, or up
to 9 cents per share.
With the industry suffering from excess capacity in some regions, providers
are focusing on acquiring satellites in underserved regions rather than
launching new ones that can cost $200 million or more to put into orbit.
"We can buy a business cheaper than launching our own satellite," said
Joseph R. Wright Jr., PanAmSat's chief executive.
Though satellites now in orbit are not necessarily state of the art, many
can still distribute video as well as provide data and voice services, said
Marco Caceres, an analyst at the Teal Group, an aerospace industry consultant.
"If the satellite is four or five years old, it still has 10 to 15 years of
life left," Mr. Caceres said.
PanAmSat is one of several satellite providers that have been purchased by
private equity investors that are more focused on generating profits than
the government consortiums that dominated the industry for many years.
In March, the company's investors, Kohlberg Kravis Roberts, the Carlyle
Group and Providence Equity Partners, took the company public, raising $900
million. The company's shares have risen 12.4 percent since then.
Yesterday, they fell 18 cents, to close at $20.24.
[Link: http://www.lyngsat.com/europe1.html ]
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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