- The Washington Times - Saturday, December 14, 2002

A battle over European satellite company Eutelsat SA officially got under way yesterday when rival U.S. firms submitted bids.
Intelsat Ltd., which is based in Bermuda but has its operations in the District, and Connecticut-based PanAmSat Corp. confirmed that they made offers for Eutelsat.
Eutelsat owns 18 satellites and beams video from broadcasters including the British Broadcasting Corp. to more than 100 million consumers in Europe, North Africa and the Middle East.
Neither Intelsat not PanAmSat divulged the details of their bids, and Eutelsat spokeswoman Vanessa O'Connor declined to name the bidders. But Eutelsat, which was set up in 1977 as an organization of state-owned phone companies to develop satellites for broadcasting and television services, could command as much as $3 billion.
"It will be no surprise if it goes for that much," said Sean Badding, senior analyst at the Carmel Group, a satellite consultant and market research firm in Carmel, Calif.
Eutelsat's three largest shareholders, France Telecom, BT Group and Deutsche Telekom, own 51 percent of the satellite company and want to divest themselves of their shares in the enterprise to pay down debt. German phone company Deutsche Telekom yesterday said it would sell its 10.87 percent share of Eutelsat to Italian publisher DeAugostini SpA for $215 million.
Intelsat President and Chief Operating Officer Ramu V. Potarazu said the company, which has 880 employees, planned to offer Eutelsat's shareholders cash and equity in the combined company.
PanAmSat President Joseph Wright declined to detail his company's offer, but PanAmSat, which is 81 percent owned by Hughes Electronics Corp., a division of General Motors Corp., has $800 million in cash on hand. The company operates 22 satellites and is the largest U.S. provider of broadcaster of satellite television. Parent company Hughes owns DirecTV.
Both Intelsat and PanAmSat want to use the acquisition of Eutelsat to enter the European market, where neither company is strong. The purchase would help Intelsat penetrate the market for video service over satellites.
Intelsat, set up in 1964 as a quasi-governmental organization and privatized in July 2001, uses its fleet of 23 satellites to market voice and data services to consumers.
"Eutelsat has assets that perfectly align with PanAmSat's and Intelsat's models," Mr. Badding said.
In addition to Intelsat and PanAmSat, Eutelsat has attracted attention from European buyout firms.
But analysts expect the Intelsat and PanAmSat to be the most serious bidders with the deepest pockets. Their competition for Eutelsat will be made even more interesting by their disdain for one another, said a Wall Street analyst who asked not to be identified.
"They absolutely hate each other," the analyst said.
Eutelsat has more than 400 employees and recorded revenue last year of $665 million.
Intelsat reported net income in 2001 of $499,000 on revenue of $1.1 billion. The company will hold an initial public offering of its stock by 2004, according to rules developed by Congress governing its transition to a private company.
PanAmSat, which operates 22 satellites, reported net income of $61.5 million during the first nine months of the year on revenue of $615.5 million. Its stock fell 2.2 percent on Nasdaq yesterday, closing at $14.56 a share.

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