Intelsat

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.

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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.

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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.