PRIVATIZATION TRANSITION BEGINS FOR INTELSAT
Following months of anticipation, Intelsat finally begins 6- month quiet period today (Thurs.) before becoming private company July 18, Intelsat CEO Conny Kullman said at Washington Space Business lunch Wed. It’s final step in Intelsat privatization authorized by Orbit Bill (CD Aug 4 p2). Kullman said company would “complete all internal work” by May. Company must conduct IPO by 2002. Privatization of Intelsat has been one of major issues in satellite industry for years, with several companies, including PanAmSat filing numerous petitions at FCC protesting what many called “preferential treatment” of company (CD July 28 p11). Kullman called transition biggest step since 1964 founding.
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Intelsat is experiencing robust growth as it develops into private company, Kullman said. Revenue for 2000 increased 13% over 1999 to $1.1 billion and net income jumped 40% to $500 million. Kullman said he expected to see modest growth in 2001, but because of “some limitations” revenue increase probably would be below 2000 figure. He said privatization would have little or no impact on 2001 revenue.
Kullman said “rising demand” for Internet service would be cornerstone of privatized company. He said new era of satellite business meant company would offer expanded broadband service, including VSAT, IP Gateway and mediacasting services by acquiring next-generation systems and adding 9 satellites to 17-satellite constellation operating at 5 new locations by end of 2003. “The satellite’s bread and butter traditionally has been providing communication access in areas where cable either doesn’t exist… or isn’t feasible,” Kullman said: “In the new marketplace, that isn’t enough.” He said satellite companies had to find ways to “develop and deliver more flexible and innovative” end-to-end solutions. Those solutions must increase value for customers and shareholders, Kullman said.
Satellite industry consultant Leslie Taylor said: “I think it’s very positive… I think they're going to be a formidable competitor. It’s very good for customers and very good for the industry to have competition… Prices get lower, service offerings are more creative. They've got a lot of talent at Intelsat, they've got a lot of good relationships around the world… I think they're doing a very good job of making the transition.”