by Nick Mitsis

It was not too long ago that satellite industry executives were nearly shouting for the financial industry’s attention. Plagued by a weak economy, eclipsed by multibillion dollar satellite business failures, and struggled with a flat-lined market and a slowdown of new business throughout recent years, money was tight and without financial support, getting through each quarter for some proved to be a Herculean feat.

Well, shouts coming from many of the global satellite operators have been heard by financiers and now many have new owners as a result of operators seeking this attention. The long-awaited announcement hit the business wires at our press time, stating that Intelsat Ltd. signed a definitive agreement for acquisition to be closed by year’s end. Its new owner, a private equity consortium, purchased the satellite pioneer for $5 billion. Though downsizing has already occurred and more is speculated to come, Intelsat executives at present site that they plan on carrying out their business objectives of this year, which are to maximize the revenues of the North American satellites recently acquired from Loral Skynet, build up the company’s data services and continue to offer turnkey connectivity services.

Private equity firms now control three of the world’s global satellite operators. In addition to Intelsat, Panamsat was purchased for $4.3 billion and New Skies was purchased for $956 million by other financiers. Likewise, mobile satellite operator Inmarsat also has a financier as a new owner. The entry of these investors has been swift and has already caused surface ripple effects throughout these companies. Downsizing, restructuring and a new corporate mentality will continue to infuse these fixed satellite service (FSS) players in the months to come.

Once the surface dust settles, however, the real transformation will begin. By their very nature, private equity firms are focused on one main thing: generating a sizable return on their investment before possibly divesting their properties and moving on to other projects. This is where it can get truly interesting.

Now, even though with every transaction there are positives and negatives, many industry analysts following these purchases that are changing the landscape of the FSS industry site these developments as a natural course of progression. Some say the buyouts that are taking place are a sign of the industry’s maturation. Others add that such ownership changes could be good for both the industry and the customers of satellite products and services.

Keep in mind no significant hand has been played to date by any of these new owners, so the future of the business of satellite operations within these corporations remains ambiguous. Will they divest excess capacity in an effort to streamline capital cost operations? Will two operators become one for the private equity firms that have holdings in more than one satellite operator? What will happen with the customers who currently owe millions of dollars in unpaid service fees? Any way you slice it, the true business impact has yet to fully come to fruition.