Intelsat is the world's leading provider of fixed satellite
services (FSS). Based in Bermuda, the firm became the first to
launch a commercial communications satellite in 1965 and, four
years later, transmitted images around the world of man's first
steps on the moon. Over 40 years on, it runs a global network of
satellites and terrestrial infrastructure which serves over 200
countries and territories and is setting the standard for the
advanced transmission of video, data and voice services.
Identify
Why this deal?
Intelsat initially came onto Apax Partners' radar screen at the
end of 2003, after Apax Funds had completed the first leveraged
acquisition of a satellite business (Inmarsat). Back then,
according to Apax Partners' Andrew Sillitoe, head of the Tech &
Telecom sector, Intelsat faced some challenges: "Intelsat had been
hit particularly hard by overcapacity in the FSS market following
the tech boom - and its revenues had been declining as a result."
But despite this, the business still posted strong and predictable
cash flows and Apax Partners was able to see the potential for
growth thanks, in part, to the expertise and relationships it had
built during the Inmarsat process.
In January 2005, Apax Funds acquired Intelsat for $5.2bn
together with a consortium of investors including Apollo, Madison
Dearborn and Permira.
Support
What happened after the deal completed?
This transaction represented a turning point for the company and
under the stewardship of a new CEO - Dave McGlade, who joined the
business in March 2005 from UK mobile operator O2 - its fortunes
began to improve rapidly. Most significantly, Intelsat agreed in
August 2005 to acquire rival operator PanAmSat in a $6.4bn
transaction. The deal, which brought Intelsat added video market
expertise, an advanced satellite fleet and a blue-chip media
customer base, created the industry's largest satellite operator
with the broadest customer base. It also resulted in a new COO for
the combined business in the form of PanAmSat's Jim
Frownfelter.
Commenting on the PanAmSat transaction McGlade said: "The plan
was to use the acquisition of PanAmSat as a vehicle to accelerate
change and improve performance. Literally, the day after we
announced the deal we began a rigorous integration process aimed at
creating a more balanced business. One of the key early priorities
was to make use of the significant synergies that existed in terms
of both operating and capital expenditures."
What about the future?
The next task for Intelsat's management team, aided by a
Principal from Apax Partners who had been seconded to the company
on a full-time basis, was to develop a clear growth strategy. This
strategy was to be based on three core principles: firstly to
maximise revenues on a satellite by satellite basis; secondly to
identify and make selective investments in key growth areas; and
finally to generate a strong pipeline of incremental business
development opportunities.
Realise
The initiatives undertaken by the management team with the
support of its backers showed clear and early signs of success,
with strong growth in revenues and profits and a real improvement
in its competitive position. In light of this, the decision was
taken by the backers to launch a sale process and in June 2007 the
investors signed an agreement to sell Intelsat to BC Partners.