Intelsat Global Holdings has a bird's-eye view of the global communications industry. The former International Telecommunications Satellite Organization, set up by governments around the world in 1964 and reorganized in 2001 as a private enterprise, provides fixed satellite services to telecom carriers, ISPs, broadcasters, and other service providers. Its system enables Internet connections, TV broadcasts, cellular telephony, and corporate network services. With a network of more than 50 geosynchronous satellites, it's the world's largest satellite services company. Customers include DIRECTV, the US DOD, Verizon, and Vodafone. The company filed an initial public offering seeking $1.75 billion in 2012.
Intelsat has been owned by funds associated with London private equity firm BC Partners and US-based Silver Lake Partners since 2007, when it was taken over in a leveraged buyout for $4.6 billion (plus $11.4 billion in debt). It then moved its registered office from Bermuda to Luxembourg, but Intelsat does almost half of its business in North America. Should it successfully go public, the company will still be majority-owned by investment funds associated with BC Partners and Silver Lake Partners. It plans to use the proceeds from its IPO for general corporate purposes, which could include reorganizing debt. Intelsat has a substantial amount of debt -- some $16 billion -- almost $4 billion of which is secured debt.
Overall revenues were up 2% in 2011, but the company suffered a net loss of $435 million despite a sales increase of 2% to $2.6 billion. Satellite service is expensive to operate, and Intelsat has not recorded a profit in about 10 years. The bulk of its sales (about 75%) come from transponder service capacity, where customers sign contracts anywhere from one to five years. Another 10% of sales come from managed services, where it offers teleport facilities and hardware in addition to satellite capacity to provide managed broadband, Internet, video and private network services to customers through its IntelsatONE system. None of its operating segment experienced substantial, sustainable growth in 2011.
Intelsat divides its customer base into three segments: network services, media, and government agencies. Intelsat has a broad customer base; its top 10 customers combined account for about one-quarter of sales. Its largest segment, network services, accounted for almost half of all revenues in 2011. Network services offers satellite capacity to wireless carriers such as India's Bharti Airtel and Africa's MTN Group, which operate in emerging markets, as well as corporate network providers such as CapRock, which offers a secure network for customers doing business in remote locations, such as offshore drilling platforms. Its second-largest segment, media, accounted for more than 30% of sales in 2011. Intelsat counts media customers such as Discovery, Fox, HBO, Disney, Turner Broadcasting, and Vivendi. Finally, services to US government agencies make up about 20% of revenues. This division serves customers through US-based affiliate Intelsat General Corporation. – less
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