Michel de Rosen, chairman and chief executive officer, Eutelsat. Photo: Eutelsat

[Via Satellite 1-2-2014] Eutelsat has officially closed its full, 100 percent acquisition of Latin American satellite operator Satélites Mexicanos (Satmex) for $831 million. Starting Jan. 1, 2014 Satmex will be consolidated in the accounts of Eutelsat Communications.

Satmex operates three satellites at contiguous positions, covering 90 percent of the population within the Americas. Satmex 5 is located at 114.9 degrees west, Satmex 6 at 113 degrees west and Satmex 8 at 116.8 degrees west. New satellites, Satmex 7 and 9, are under construction and currently scheduled for launch in 2015. When combined with Satmex’s existing constellation, these satellites will more than double in-orbit capacity.

“With the acquisition of Satmex, Eutelsat is significantly upscaling activity in the Americas to complement our strong presence in fast-growing markets,” Michel de Rosen, chairman and chief executive officer, Eutelsat told Via Satellite. “Satmex’s strategic orbital slots, which will be expanded in 2015 with two further high-performance satellites, bring Eutelsat a robust platform from which to access significant opportunities in this region. They will be further complemented by the Eutelsat 65 west A satellite that we will launch in advance of the 2016 Olympic Games in Rio de Janeiro to serve video and broadband markets in Latin America.”

The impact of the acquisition on the group’s financial outlook will be communicated at the latest with first-half 2013-2014 results, which will be announced on Feb. 14, 2014. The financing requirements in connection with the acquisition are covered following the issuance of six-year senior unsecured bonds on Dec. 13, 2013 for a total of $1.27 billion, secured at attractive terms.

The opportunity to acquire Satmex was opened up by a combination of Mexican regulatory reforms and an auction for on-orbit rights by Brazil’s regulatory agency Anatel. Initially foreign ownership of telecommunications companies was not allowed to exceed 49 percent, however in June of this year, the Mexican government’s telecommunications reforms increased the amount to 100 percent. This made it possible for Eutelsat, who had been eyeing Satmex as an entrance into the Latin American market, to act. Furthermore, Anatel’s decision to re-auction orbital rights over Brazil gave Eutelsat an even greater opening.

“The prices paid by others were very significant and more than we were willing to pay,” said de Rosen. “We then were very lucky. A few months after the auction we were told that a company that had won one of the auctions decided not to move for- ward. Anatel then decided to open an auction with the next two companies in line, Eutelsat and Intelsat. We won this new round for $8 million. We got a great deal and secured 65 degrees west, which is an excellent position to cover Brazil.”

Eutelsat moved quickly to position the company to capitalize on new opportunities in South America. Only a day before the Satmex deal, Eutelsat announced that it was ordering Eutelsat 65 West A, which it expects to be online by early 2016. The new satellite is designed to serve video and broadband markets in Brazil and across Latin America.

“We started working on this as soon as we knew we had won the auction,” said de Rosen. “We brought our proposal to the board and recommended we move fast because of key upcoming events including the Olympic Games. So, that was a 2011-2013 initiative.”

Now that Eutelsat has successfully acquired Satmex, the company is positioned to grow in select new markets, which has been part of the company’s long-term strategy.

“We identified two new regions, Asia and Latin America,” said de Rosen. “In 2012 we moved into Asia. In 2013 we made our move into Latin America … [Satmex gives] us a critical mass in a continent where we were a marginal player.”