[Satellite News 01-21-10] Michel de Rosen took over the role of CEO of Eutelsat Communications in November. He does not have a long history in the satellite communications sector, but de Rosen is well-versed in Eutelsat’s operations and ready to grow the company.
    In part two of an exclusive with Satellite News, de Rosen discussed his expansion as well as other issues facing satellite operators.

Satellite News: Would you look to bridge the gap between Eutelsat and SES and Intelsat?

de Rosen: I have not been convinced in my six months at Eutelsat that it is a must to become a global player, unlike other industries such as software or pharmaceuticals, where it is essential in order to sell products worldwide and offset huge amounts of R&D. As a satellite company, we are not obsessed by size, but we are obsessed with generating growth, with operational performance, customer satisfaction and creating value for shareholders on the long-term. In other words, our mantra is quality not quantity; excellence, not size. I believe that it is certain that the most important growth engine for Eutelsat over the next years will be organic growth, and I believe this could be complemented by focused deals, which could be small-to-mid-sized acquisitions, and small-to-mid-sized joint ventures. ProtoStar was a good example of exploring opportunities but also showing financial discipline.

Satellite News: Are you concerned about access to space?

de Rosen: Over 50 years into the space age, it’s still quite a challenge getting into orbit. Eutelsat has pursued a long-standing policy of securing launch services through multiple launch providers, and our preference is to continue this way. My conviction is that there is nothing better than competition. We will be a better company and serve our customers better if we operate in a competitive environment. We will serve the market better if our suppliers also have to go through real competitive processes. This applies to anything we do, and it also applies to launchers.
    Both Arianespace and ILS are terrific companies with great CEOs. They performed exceptionally in 2009, each achieving a record seven launches, which included our Hot Bird 10 satellite with Ariane and W2A and W7 with Proton. However, this actually corresponds to the launch of 15 commercial satellites, while a total of 30 commercial GEO satellites were ordered. So, what would happen if ILS or Arianespace had any issues that interrupted their launch rhythm? It is very important for the industry, not just for Eutelsat, that there be enough companies selling launchers.

Satellite News: Did you push hard to acquire any of the ProtoStar assets? Were you disappointed not to gain one of these?

de Rosen: We made a bid for the ProtoStar 1 satellite. This is a good evidence of us looking at the opportunities beyond organic growth. We had a very rigorous process and came up with a price we were willing to pay. When the auction reached a level that we were not prepared to pay, we decided to stop. I believe this is a good sign of the financial discipline of the company. It has been part of the company culture for years, and I am committed to it remaining so for years.

Satellite News: How do you hope to position the company outside of Western Europe?

de Rosen: We see ourselves as the world’s number one regional operator in a core region going from Western Europe to Russia and from Africa to India. Going forward, our number one priority is to continue to grow throughout all these areas where we are already strong, and particularly where we see headroom for more growth, for example in Eastern Europe where satellite TV penetration is only 16 percent compared to 31 percent in Western Europe. As you know, our W7 satellite is specifically designed for both Eastern Europe and Africa, doubling capacity at 36 degrees East. With 450 channels, this is Eutelsat’s second largest video neighborhood, after the Hot Bird neighborhood. Anchor tenants with long-term contracts at this position include Intersputnik for Gazprom and MultiChoice Africa. This gives us presence and visibility in Russia and Africa which are two key regions with considerable potential for growth. Our priority is to continue to invest and deepen our presence in the areas where have built solid success and foster new opportunities in emerging markets in our footprint.

Satellite News: What are your plans in the Asia-Pacific region?

de Rosen: We have a recent collaboration with ABS which shows we are interested in growing in Asia and in pursuing growth opportunities through partnerships. In our sector, we believe that Asia is the continent with the most intriguing and exciting opportunities. We are not wizards, but it is obvious there is the most economic growth here and that the use of satellites could grow tremendously for both broadcast and broadband services. If we can increase our presence in Asia with partners like ABS, then good, and we are exploring a number of ways to achieve this objective.

Satellite News: Are there areas of the business that you have identified where you feel as though Eutelsat can make major improvements?

de Rosen: I believe Eutelsat is a brilliant company. I also believe that only the paranoid survive. The best companies are successful ones that are not sucked into comfortable self-satisfaction but impose continuous improvement on themselves. Business journals are littered with stories of companies that, in the belief they were the greatest, were toppled off their perch by someone else trying harder. I don’t aspire to Eutelsat being the largest satellite operator in the world, but I do aspire to it being the best satellite operator in the world. This is a good goal for us and there is always room for improvement to deliver operational excellence and serve customers better. I also believe that we must combine Eutelsat’s ability to deliver excellent short-term earnings with long-term growth. In the short term, our objective is to pass 1 billion euros in revenue this year. In the long term, it is important to identify the growth engines of 2015 through 2025 so investors are assured we can continue to generate growth downstream. I want us to be appreciated not only as a defensive stock but also as a growth stock.

Satellite News: What would Eutelsat be prepared to do, to help someone like Sea Launch and keep more competitors active in the launch sector?

de Rosen: It would be beneficial for the overall industry for Sea Launch to be able to continue, and it is certainly a positive sign that they were able to secure debt-in-possession financing by the U.S. bankruptcy court in Delaware without the financial support of their clients. This should allow them to come out of Chapter 11 with a better balance sheet and a rationalized industrial system, and resume their place as a competitive long-term player. We have always assured the management of Sea Launch of our support. Our contribution to their future, and which we have communicated to Sea Launch, is that we are willing to order services from them so they can continue to be a player in the competitive landscape of the launch industry.

Satellite News: Does the current dynamics of the launch industry change your thinking in terms of procuring launch services?

de Rosen: Our basic starting point is that we want to use high-quality launchers and we want to work with an industry with enough internal competition. That is strategic. The way we implement this strategy and do our business with launch companies is tactical and opportunistic. This is not a religion. If we see we can get better deals by buying multiple launches, as opposed to just one, we will consider it.

Satellite News: Is there any message you would like to give to the industry?

de Rosen: There is a triple message. Firstly, we are still a relatively small industry, which means I can get to know many of your readers very quickly, but it also means we can be forgotten next to the giant telecom companies. So we must unite for our voice to be heard and join forces so others can recognize what satellites can contribute to the world and so governments and decision makers are mindful of having a neutral approach to technologies. Secondly, quality of service is paramount, and we want our customers to be straightforward and demanding so we can further improve our performance. In the words of Bill Gates: “Your most unhappy customers are your greatest source of learning." Finally, this company has a fantastic wealth of talent which can be leveraged to achieve tremendous ambitions. I believe we can take the company to the next level over the next 20 years if we continue to work with passion, rigor and have openness to new ideas which could be future money earners. We must combine energy, humility and ambition. In this way, we can continue to be the best satellite company in the world.