[2/19/07 edition] Eutelsat CEO Giuliano Berretta believes 2007 will prove to be a good year for the Fixed Satellite Services (FSS) sector, with continued strong performance fueled by possible regional consolidation.

"2007 will be a year of assimilation for the big acquisitions, organic growth for the rest with some potential for consolidation among smaller operators," Berretta said. "I think it will be a good year for satellite with continued recovery of the FSS sector in depressed regions and a win-win situation for operators and users elsewhere."

Entering 2007, Spanish industrial group Abertis and France’s Caisse des Depots et Consignations are now the two largest shareholders in Eutelsat, holding 32 percent and 25.5 percent of the operator, respectively.

"I am extremely positive about the arrival of the Caisse des D�pots, which brings stability to our shareholder base, and Abertis, who has a strong international reputation and a dynamic vision about the development of international infrastructure," Berretta said. "We are very confident that we can find strong synergies working together."

The two new owners are taking large interest in a company from private equity firms, but Berretta believes Eutelsat has not suffered under its private equity owners. "People sometimes say that when you have [private equity] firms behind you, your scope for investment is reduced," he said. "However, our track record over the last four years contradicts this. Since 2001, we have carried out 10 satellite launches; opened sales offices in Europe, America and Asia; acquired a teleport in France; and created our Skylogic subsidiary, which I believe is now one of the world’s leading IP satellite platforms and certainly the leading platform in Europe. In 2006 alone, we launched two large broadcast satellites (HotBird 7A and HotBird 8) and ordered five satellites, which represents almost 25 percent of the global order intake of commercial satellites worldwide in 2006."

With Abertis on board, a potential Eutelsat tie-in with Hispasat becomes a stronger possibility. "We have a very good understanding of the Spanish market," Berretta said. "A number of key people already in Eutelsat are Spanish, and I am enthusiastic about more integration with Hispasat. However, as we are at the beginning of a new story with Abertis, it is too soon to make any affirmations on our future relationship with Hispasat."

Eutelsat is the third largest FSS operators behind Intelsat and SES Global, but Berretta is not concerned with growing just to try to keep up with the two industry giants. "We are certainly following the route of geographic expansion organically and through Hispasat, whose Amazonas-1 satellite has good coverage of North and South America," Berretta said. "We consider this to be the best route and it has proven profitable for Eutelsat. … We do look at possible acquisitions of relevance to our business and will review strategies with our new shareholders. I am confident that with new partners that we cannot only consider organic growth, but also something more. I see opportunities for further expansion, which includes having a stronger relationship with Hispasat and also looking at other routes to further growth."

Berretta sees opportunities in new value-added applications and services, particularly for providing broadband in transportation markets. "This will enable us to pursue our strategy of maximizing revenue per transponder in parallel to attracting new services to our premium neighborhoods and cascading capacity out to our emerging premium positions," he said.

To capitalize on the opportunities will require further capital expenditures, and Eutelsat has an aggressive plan as it looks to drive strong revenues.

"Our capital expenditure was recently raised from 770 million euros ($1 billion) to 980 million euros ($1.27 billion) for the next three years in order to accommodate Hot Bird 10 and the investment in the S-band payload on W2A," Berretta said. "This is a solid plan of expansion, which will fuel our future growth. We now have five satellites in construction (W2M, Hot Bird 9, Hot Bird 10, W2A, W7), which will enable us from 2008 to bring fresh capacity to premium neighborhoods, and to cascade existing in-orbit capacity to new locations.

"Our two most recent acquisitions, W2A and W7, are our biggest satellites to date, and will enable us to extract greater value out of the 10 degrees East and 36 degrees East locations. With Hot Birds 9 and 10, which will be co-positioned with Hot Bird 8, we will have a battery of three identical 64-transponder satellites at 13 degrees East in order to provide full redundancy to our broadcast clients."

— Mark Holmes

Contact, Vanessa O’Connor, Eutelsat, e-mail, [email protected]