Experimental feature

Listen to this article

Experimental feature

Eutelsat Communications, the pan-European satellite operator, has confirmed plans for an initial public offering on Euronext Paris which is expected to value the group at €2.5bn-€3bn ($3.1bn-$3.6bn).

The decision by its private equity owners to float the company is the latest in a series of corporate moves which have transformed the market for video, data and telecoms satellites. Last month Intelsat announced a $3.2bn bid for PanAmSat to create the world’s largest satellite operator, ahead of SES Global.

The IPO is expected to provide an opportunity for Eutelsat’s main shareholders to realise substantial profits. The group, established as an intergovernmental organisation, was taken private in 2001 and is now controlled by Eurazeo, Spectrum Equity Investors, Texas Pacific Group, Cinven and Goldman Sachs Capital Partners after a recapitalisation this year.

Private equity groups have spent an estimated $9bn on satellite acquisitions in recent years, attracted by strong cashflows, cost-cutting potential and growth in demand for high-definition television and broadband services.

Most of those companies have now merged with others or returned to the market.

Figures released by Eutelsat on Wednesday reinforced expectations that the listed company should be able to provide investors with a high dividend yield but will offer relatively low growth and carry substantial amounts of debt.

For the year to June 30, it reported revenues of €750m, up just 0.5 per cent after adjusting for late delivery payments, and a fall in earnings before earnings, tax, depreciation and amortisation from €599m to €587m. The company said its ebitda margin of 77.1 per cent was among the highest in the sector. Net debt at June 30 was €3.16bn.

Eutelsat operates a fleet of 23 satellites in geostationary orbit, which serve clients such as BBC World, Deutsche Telekom, Reuters and Sky Italia.

Broadcasting and professional video services accounted for 68 per cent of its revenues this year, with data and value added services contributing 22 per cent.

Giuliano Beretta, chairman and chief executive, said Eutelsat’s filing of IPO documents with the AMF, the French market regulator, marked an “important milestone”.

The group was “strongly positioned to take advantage of the multiple opportunities that lie ahead, in HDTV, two-way broadband satellite access services, and addressing buoyant demand from emerging markets,” he said.

Revenue from data and value-added services grew by 8.1 per cent, compared to a 1.5 per cent growth in video applications. Revenues from multi-usage leases fell 22 per cent.

The group would not comment on whether it had chosen a financial adviser to lead the IPO process.

Get alerts on Telecoms when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article