Finmeccanica joins the race to acquire Eutelsat

ALEXANDER CAMPBELL / LONDON

Italian defence group sees satellite operator as key part of restructuring plans

Finmeccanica has become the latest potential suitor for European satellite operator Eutelsat, joining global operators PanAmSat and Intelsat.

Sources confirm that the Italian defence group is interested in acquiring Eutelsat as part of a restructuring focusing on core aerospace and defence operations. Finmeccanica has several space companies, the main one being Alenia Spazio, and recently boosted its space activities by acquiring Telespazio from Italian Telecom. Space activities contributed 7% to the group's revenues last year.

The Italian group declines to comment on its interest or whether it has made a bid. Intelsat's bid is believed to be around $3.5-4 billion.

Eutelsat announced earlier this year that it would float before the end of this year, but a depressed communications market has meant that, so far, little progress has been made towards an initial public offering. A merger of Eutelsat and Intelsat would create a rival to the current industry leader SES Global, which has over 40 satellites in geostationary orbit.

Further consolidation is needed in the struggling satellite operations sector. With the collapse of the telecommunications bubble in 2000 and the slack world economy, demand for transponder capacity has dropped sharply. Schemes to supply broadband internet connections via satellite link to remote or mobile receivers have now largely collapsed, with a consequent slump in anticipated demand for satellite capacity.

Last year saw SES take over Americom to become the biggest single fixed (geostationary) satellite operator, as revenues for all the major operators fell or remained constant.

Industry executives at the recent World Summit on Financing for Satellite Communications conference in Paris blamed higher insurance premiums, overcapacity and collapsing demand for the slump, which will also hit satellite manufacturers. Satellite orders will remain low this year, they say.

Source: company reports

Source: Flight International