Loral Space & Communications Ltd is strengthening its satellite offerings especially in the corporate and internet services area, with the acquisition of Rockville, Maryland satellite company Orion Network Systems Inc for approximately $490m in Loral stock. Orion owns and operates the Orion 1 satellite, which services the US, Europe and the transatlantic market, and it has two satellites under construction, Orion 3, scheduled to go into operation in January 1999 to service the Asia Pacific region, and Orion 2 in June 1999 for the Americas and Europe. It is Orion’s customer base of 260 multinational businesses and internet service providers in 47 countries which seems especially attractive to Loral. In particular, Loral gains Orion’s corporate data networking capacity, and a strong presence in Europe. Orion also transmits video communications for television and other program distribution services. This will help Loral compete with its major rivals, Intelsat, the international satellite consortium, and Panamsat, 71.9%-owned by Hughes Electronics Corp, both of which have the data networking capabilities and a European presence. Although the acquisition should boost Loral’s gross profits, analysts do not expect the company to be profitable before 1999 because of its $720m debt load. Orion has seen the inevitable losses incurred with the costs of launching its satellite – it reported second quarter net losses of $24.7m up from $6.8m last time on turnover up 64.9% $16.7m (CI No 3,211) – but analysts reckon Loral is getting in just at the point where the company is starting to see gross profits, some $9m for 1997 before income taxes, depreciation and amortization.
This article is from the CBROnline archive: some formatting and images may not be present.
CBR Online legacy content.