To: Valueman who wrote (5675 ) 4/3/1999 11:20:00 AM From: Valueman Read Replies (4) | Respond to
Time for another consolidation rambling(sorry Jeff). I was thinking, if I was GE, or Alcatel, or SES, or AT&T, or LMT, or???? and I wanted to expand my role in satcom services, what should I do? Should I take 3-5 years to build, launch, and market a bevy of satellites, or do I look at Loral? Let's see.....they have or will soon have 7 of their own sats, 3 SatMex sats, and orbital real estate up the proverbial wazoo. At $250 million each, the sats go for roughly $2 billion(I discounted SatMex for having less than state of the art sats and half ownership). G* is worth about $1.4 billion, SS/L about $1.5 billion. All in all, these basic assets stack up to about $5 billion, or about $400 million more than present value of Loral in the market. Notice that I did not include anything else in the soup. If I am one of the previously mentioned companies who have shown a deliberate desire to enter satcom or greatly expand their role, I am doing this same calculation right now. I am thinking that I can enter this biz with a Loral takeover in a big way for a decent price and skip years of launch risk, sat risk, political risk, FCC/ITU nonsense, etc. What brought this home to me recently was the comment from Schwartz that he could sell SS/L tomorrow with a single phone call. If he can, so can anyone else. If GE doesn't want to be in manufacturing, they can sell it. Same goes for AT&T. The satellite services biz is then pure. That is a much more delicious prize. Also, if I am someone already in the game, like GE or LMT or SES, by owning these sats rather than launching more of my own, the supply of transponders does not go up. Supply remains tight, prices firm, etc. Is all this worth paying double today's price? Could be. I wonder what these other companies are thinking????
