Satellite firm Intelsat Ltd. has been a quiet technological giant in the District’s Northwest for more than 20 years, but the satellite company today will become an even bigger local and international player when its acquisition of PanAmSat Holding Corp. is expected to close.
The companies announced in August that Intelsat, with headquarters in Bermuda but housed in a mirrored fortress at the corner of Connecticut Avenue and Van Ness Street, would acquire rival PanAmSat for about $3.2 billion. The Department of Justice approved the deal in May and the Federal Communications Commission followed suit last month.
The U.S. government is the largest customer of privately owned Intelsat, with most of the company’s revenue coming from voice and data services. Wilton, Conn.-based PanAmSat draws two-thirds of its revenue from video, carrying 2,200 television programs worldwide, said Joseph R. Wright Jr., chief executive officer of PanAmSat.
The combined companies’ fleet of 51 satellites, all of which eventually will be controlled from the D.C. office, are spread about evenly over land and water and “almost fit like a hand in a glove,” said Mr. Wright, who will become chairman of Intelsat’s board of directors. David McGlade, will remain chief executive officer.
In addition to radio and television broadcasts, satellites are used to transmit signals supporting everything from Internet and telephone connections to transactions at automated teller machines. The spacecraft also can support emergency communications networks after wired systems become overwhelmed or fail, as was the case in the aftermath of Hurricane Katrina and the September 11 terrorist attacks.
Although Intelsat does not expect to enter the U.S. retail market initially, it has its sights set on the emerging mobile video arena where a lone device also can handle voice and data applications, Mr. Wright said.
“We’re in a great position to participate in that evolution,” he said.
Intelsat and PanAmSat are expanding operations in Mexico, Latin America and Africa, many places that lack a wired communications systems. “This will be the way they get the services we’re used to,” Mr. Wright said.
The integration of the two companies is a challenge, but sales, marketing and administrative duties will be combined immediately, followed by customer service operations, Mr. Wright said. The financial organization should be complete within a year and information technology and related systems merged within 18 months. All of it should be seamless to Intelsat customers, he added.
The companies’ combined work force of 1,400 will be cut to 1,000 within 18 months.
More than half of Intelsat’s 1,000 employees will be located in the Washington area. The federal government, including the departments of Defense and State, will remain its biggest customer.
A group of financial institutions led by Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit Suisse First Boston LLC and Lehman Brothers Inc. acted as initial purchasers on the deal. PanAmSat will cease public trading as soon as it is finalized, said Dianne VanBeber, vice president of investor relations for Intelsat.
Consumers will benefit from the deal as the combined company will have a larger fleet in space and on the ground, while continuing to expand their offerings, said David Cavossa, executive director of the Satellite Industry Association in the District.
The network has “redundancy and resiliency” that will enable business and government to continue working, so when the next hurricane hits, satellite-based backup systems are ready, Mr. Cavossa said. Manufacturing, launching, servicing and controlling the spacecraft adds up to a $100 billion industry, he added.
The Intelsat deal, as well as the purchase by its largest competitor, SES Global of Luxembourg, of New Skies earlier this year should help boost the industry’s profile.
“We want to make the invisible infrastructure’s role more apparent, and hopefully get people to invest more heavily,” Mr. Cavossa said. “Turn the invisible infrastructure into the visible infrastructure.”