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Eutelsat grows satellite wings to Spain, PortugalEutelsat grows satellite wings to Spain, Portugal

Eutelsat spreads its sat broadband empire to Spain and Portugal. But after spurning Patrick Drahi's takeover offer, is it still on the auction block?

Pádraig Belton

October 28, 2021

4 Min Read
Eutelsat grows satellite wings to Spain, Portugal

Eutelsat is spreading its antennas, and branching out to Spain and Portugal.

The new partnership with Spain's Hispasat has the Madrid company leasing capacity on Eutelsat's geostationary Konnect satellite, to deliver internet service at up to 100 megabits per second to customers without access to ground-based networks.

The Konnect satellite was launched in January 2020 on an Arianne 5, and focuses on providing broadband and communications coverage to Europe and sub-Saharan Africa, where Eutelsat was keen to establish a foothold.

Figure 1: Eutelsat Quantum in the compact antenna test range facility at Airbus Defence and Space (Toulouse, France). (Source: ESA Stephane Corvaja) Eutelsat Quantum in the compact antenna test range facility at Airbus Defence and Space (Toulouse, France).
(Source: ESA Stephane Corvaja)

The deal, filling in around similar arrangements in France, Italy, Germany, and South Africa, is worth revenue of "high single-digit millions," the companies said in a statement.

Star bucks

The two companies, after all, have history.

Eutelsat had a 34% stake in Hispasat until April 2018, when it sold it for €300 million. Two decades before, Eutelsat had looked to the Spanish company as a pathway into markets in Latin America, a plan it ditched when it bought Mexico's Satmex instead in 2014.

But on the other hand, Eutelsat is also soon to be the second largest investor in OneWeb, with a 23% stake once regulators approve the investment. One investment that is not going ahead, is an unsolicited takeover offer which French telecoms billionaire Patrick Drahi made at the end of September.

Drahi's Altice telecoms investment firm became BT's biggest shareholder in June, nabbing a 12.1% stake for £2 billion. It was his return to dealmaking after two years of pruning back Altice's debts.

And Eutelsat starts to look like a bargain, when you consider its shares are trading at all-time lows after five years of contracting profits and revenues. This summer, it released full-year earnings showing its income had shrunk 29.2% in the year through the end of June, to €347.2 million.

But Eutelsat decided his price was too low, sniffed the company: "the relevant governance bodies of Eutelsat Communications have unanimously decided not to engage in discussions based on the terms of this proposal," it said in a statement.

At the time, the company was trading in Paris at €10.35, giving it a market capitalisation of €2.4 billion. Drahi came in at €12.10. Analysts suggested €14 a share might be a more credible offer, making more sense for a consolidator within the satellite market.

Got board

Eutelsat's CEO, Rodolphe Belmer, announced last Friday he was leaving immediately to take over as CEO of one of its chief customers, troubled French IT consulting group Atos.

He won't need to go far, at least. Atos is about a half hour drive to the Paris suburbs from Eutelsat's headquarters, which basks in the glory of the Left Bank. Two acting co-CEOs took over for Belmer on Monday, while the company starts a hunt for a permanent successor to replace him after five years at the helm.

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By strange happenstance, his chief rival, Stephen Spengler, the CEO of US-based Intelsat, also announced he was retiring. Intelsat will be emerging from bankruptcy, once a bankruptcy court in Virginia approves a deal to cut its $15 billion debt to $7 billion. The deal has the approval of 75% of its creditors, but not satellite operator SES, one of its biggest creditors.

Meanwhile, Hispasat isn't Eutelsat's only recent spurt of dealmaking for the Konnect satellite.

Deutsche Telekom has also recently inked a deal to deliver high-speed broadband from the Konnect satellite to German households with limited internet connection, starting at the end of this year.

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Pádraig Belton, contributing editor special to Light Reading

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About the Author(s)

Pádraig Belton

Contributor, Light Reading

Contributor, Light Reading

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