Eutelsat

www.eutelsat.com

Key Information

Date of investment : April 2003
Activity : Operator of fixed satellite services
Funds : Pragma I
Status : IPO in 2005 and transfer in February 2007
2006 Sales : 791M€
493 on staff

Activity

Eutelsat was created in 1977 as an intergovernmental organization (OIG) with the aim of providing Europe with a satellite telecommunications infrastructure. Eutelsat launched its first satellite in 1983 and operates 27 geostationary satellites today, covering two thirds of the planet across Europe, the Middle East, Asia, Africa, and the Americas. Eutelsat was the first European operator and is currently one of the three original global operators of fixed satellite services.

The Group is maturing at the convergence of space, telecom, and audiovisual industries and is thus currently at the center of new challenges in the digital economy.

Millions of homes around the world benefit from Eutelsat’s services through the reception of original information and programming from around the world: today Eutelsat transmits more than 3,700 television channels across the globe and more than 1,100 radio signals.

Thanks to its wide spectrum of interconnection services, network safeguards, and data dissemination, Eutelsat has also become an indispensable source of performance and flexibility for telecommunication enterprises and operators in more than 150 countries. It also contributes to the release of homes from the shackles of terrestrial networks and to the improvement in internet connection mobility.

Key points of the transaction

With this transaction, Pragma was able to take a stake in a company demonstrating high margins (EBITDA at 76% of earnings) and occupying the position of market leader. The strong business resilience constituted by high entry barriers and an excellent prospective revenue outlook (backlog > 4 years, capital intensity) made this an investment particularly interesting.

The Group also had access to a very young fleet of satellites and had remarkable development potential. Furthermore, at that time France Telecom was markedly indebted and sought to sell its non-strategic activities. The resulting sale of France Telecom’s shares in Eutelsat was realized in cooperation with Eurazeo and completed in April 2003, resulting in a remaining share of 1.6% in the group for Pragma.

Evolution of the group

A strategic realignment took place during the period when Pragma was a shareholder (2003-2006). Eutelsat was able to implement a new development plan for its satellite fleet by engaging in a shareholder consolidation through a minority interest buyback, changing its governance (Eutelsat transformed from a principally publicly held company to a principally privately held company), and making a real effort to optimize its financial structure.

Moreover, Eutelsat benefited from an increase in video service demand and favorable dynamics in added-value data services when it developed its internet service offerings and reinforced its position in the TVHD market – a strategy that is at the foundation of the Group's current success and which increased its EBITDA margin and resulted in sales passing one billion Euros.

This realignment allowed Eutelsat’s valuation to improve and led to a successful IPO opportunity which was completed at the end of 2005. In effect, the group was recapitalized at the beginning of the first quarter of 2005 which permitted the group’s placement on Euronext Paris Compartment A: To allow it to reimburse a portion of the group’s debt financings and to issue new shares for up to 30% of the existing capital.

Finally, on December 7, 2006, Eurazeo, Pragma, and the other shareholders of BlueBirds and RedBirds signed a contract to transfer their participation in Eutelsat Communications to the Caisse des Dépôts et Consignations. The transaction was finalized on February 16, 2007.

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