In what must be the understatement of the year David McBride, CEO of Intelsat, tells Developing Telecoms why he THINKS(!) a US$6 billlion merger between Intelsat and PanAmSat positions the new giant well for its customers...

Corporate, Satellite, Global: Add together the US$3.2 billion paid by Intelsat for PanAmSat’s reaming shares and an identical sum for the PanAmSat debt inherited by Intelsat, and you will arrive at the price paid by Intelsat to become the world’s largest worldwide satellite company. In what must be the understatement of the year, the CEO of the new company, Intelsat CEO David McGlade declared: “We will have the biggest breadth in terms of global distribution, which we think positions us well for our customers, and for international distribution of their content and data connectivity.”

Under the trading conditions which the merger itself creates, Intelsat is anticipated to provide one-stop shopping and hosted services not only to a wide variety of customers but to be the number one company in virtually every segment of the Fixed Satellite Service (FSS) industry.

The “armoury” of the new company will comprise 51 satellites, eight owned teleports and more than 20 affiliated international gateways connected by 40,000 miles of fibre. Almost every part of the world’s populated regions will be reached by this capacity.

Crucially for the emerging markets, David McGlade believes “There is tremendous growth in the African continent for telecom distribution services…There is an exploding need for ubiquitous connectivity and communications, and there is very little fibre infrastructure in Africa. The continent needs cellular backhaul, Internet connectivity, cybercafes, and a whole range of services.”

A further aspect is that in David McGlade’s opinion the two global satellite networks were complementary: PanAmSat’s satellites covered large land masses and were prominent in video distribution, while Intelsat tended to supply a larger number of corporate networks with their data requirements. He summed up the strengths of his new “empire” as follows:

• maximum operating flexibility;
• ability to adapt to changing market conditions;
• unprecedented backup capabilities;
• greater than 99.999% reliability;
• efficient distribution solutions for customers, whether point-to-point, or internationally;
• carrying one out of every four TV channels carried over FSS;
• Possibly the top provider of transponders for video programming worldwide; and
• possibly more high-definition TV programming than any other FSS carrier.

Planning for the combination of the two companies has been underway for some time – the merger was announced in August of 2005 – as the companies awaited regulatory approvals. Integration will mean job cuts to eliminate duplication although Intelsat will still have its HQ in Bermuda.