Brian:
I don't see any impact on LOR/GSTRF directly from this merger.
I would like to comment on consolidation in the industry. It is happening, and happening quickly. I do not see how Loral and G* will come out of it without being affected. What has happened?
Well, Loral has taken in AT&T's Skynet division, and Orion. Lockheed is trying to buy Comsat. Hughes buys USSB. DISH purchases the slots and sats of ASkyB. SES buys 34% of AsiaSat, and says it is looking for assets in the US. Motorola folds its Celestri system into Teledesic. The Europeans are consolidating, as Brian pointed out. The Japanese are entering the business, looking for assets. Gilat buys GE's VSAT business. Hughes increases its stake in PanAmSat. CD Radio gets large investments from private investor funds.
It is not just a case of normal business. It is an indication of the massive amounts of capital required to implement the business plan in the satellite world. It is a simple fact that you pay now, and collect later. Loral will not be immune to this. They will need help. That means very close partnership or a buyout. I think it is inevitable. If someone like AT&T or Alcatel want a global presence, want a diverse entry into the satellite business, want to expand into satellite services, or improve manufacturing(in the case of Alcatel), want that coveted "last mile" link on a global scale, there are few options available. I do not know Alcatel's plans, but they are not part of this new consortium. If they are interested in being a "player", I do not think they stand still. I may be wrong about all this, but when an industry is consolidating into larger and larger hands, our company, with a market cap of $5 billion, is a small player with target written all over it. Stay tuned. |
