Permira in talks to sell Asia Broadcast Satellite

Permira, the UK private equity group, has held talks with a handful of global satellite operators on the sale of Asia Broadcast Satellite, or ABS, a deal that could fetch upwards of $1bn.

Madrid-based Hispasat and Japan’s JSAT Corp are among the companies in talks about buying the satellite business that Permira acquired in 2010 for about $200m, according to people briefed on the conversations.

Luxembourg-listed satellite operator SES also looked at the company, the people said. However, SES said this month that it had exercised an option to acquire full control of orbiting satellite network O3b for $730m, a transaction that is likely to keep it out of the bidding for ABS.

The first round of bids for ABS were submitted last week, the people added. Goldman Sachs is advising Permira on the sale.

Permira and JSAT declined to comment. Hispasat and Goldman Sachs did not respond to request for comment.

The sale process comes as larger satellite operators have been battered this year. A growing number of smaller technology companies are challenging industry incumbents with lower-cost, high-capacity systems.

France-based Eutelsat has warned of lower demand from broadcasters, and analysts highlight a shift by viewers from satellite TV to fibre-based internet-based services, as well as channel closures.

Inmarsat, a UK-based satellite telecoms group, has also found competition rising as demand slows.

Through the first five months of this year, Inmarsat, SES and Eutelsat saw their shares drop by more than a quarter — wiping more than £6bn from their market value.

One person following the ABS deal said Permira would be fortunate to fetch an enterprise value of $1bn in these conditions. This person added that ABS makes around $100m in earnings before interest, tax, depreciation and amortisation and the sector tends to trade at between 6 to 7 times ebitda.

Another person added that the positioning of ABS’s satellite fleet may help improve the value of the company and make it worth up to $1.5bn.

ABS was founded in Hong Kong in 2006 by Thomas Choi, who is still chief executive. It operates a fleet of seven satellites that provide broadcast and data services covering 80 per cent of the world’s population, according to the company’s website. Three of those satellites were deployed after Permira’s acquisition, with the most recent launching in June this year.

Under Permira’s management, ABS has doubled its employees to 200 and more than trebled the number of physical transponders from 103 in 2010 to 348 at the end of 2015, according to the private equity group’s website.

Additional reporting by James Fontanella-Khan