British investment group Broadband Satellite Services (BSS) is hungry for its next satcoms acquisition after sealing its first consolidation deal.
Chief executive Ian Robinson told SatelliteFinance he is in active discussions over two potential…
British investment group Broadband Satellite Services (BSS) is hungry for its next satcoms acquisition after sealing its first consolidation deal.
Chief executive Ian Robinson told SatelliteFinance he is in active discussions over two potential deals.
One would add value to its existing network and the other would boost BSS revenues by roughly 50% to around US$150m a year.
Robinson said he was planning a global consolidation drive after recently completing the takeover of satcoms services providers AND Group and Satcom Global.
AND is a US$25m company focusing on maritime and has offices in the UK, Greece, Singapore and Brazil, whereas Satcom pulls in around US$75m a year and is more land-based with offices in the UK, USA, Thailand, Singapore, Hong Kong, Japan and Australia.
According to Robinson, his growth strategy will see BSS become a US$250m company in the space of three years.
“Since the deal has been completed I’ve been offered seven companies,” he said.
“There are a lot of companies in the channel who are looking for alternatives.”
The satcoms market is notoriously fragmented and, as businesses come under pressure from rising costs and competition, Robinson said it makes sense for the industry to be consolidated because these providers tend to have similar company structures.
He explained: “We have very good billing, customer services and finance departments. And once you’ve got that you can fit as many service providers into it as you want. Because, if you take out the core costs, what you’re left with is the sales operations, and it’s only those that really matter.
“As long as you recruit and maintain customers, it’s a subscription business at the end of the day.”
For the AND/Global Satcom deal, BSS secured US$12m from asset-based lender FGI Finance and fund manager FW Capital, which can be increased because it is based on receivables finance.
Alongside giving the company some flexibility over it further funding requirements, this alternative financing instrument has enabled Robinson and his CFO Robert Howes to retain 100% ownership of the group. Robinson said having full control will be vital as he embarks upon his acquisition trail.
“If you look at other companies that have gone out and sold their soul time and time again by bringing in extra layers of mezzanine finance, it never works,” he said.
“They’ve always ended up with a whole load of diverse shareholders who have different views on the world. In this case all that matters is our view and we’re most comfortable with that.”
He added that, while venture capitalist markets may be stocked full of cash, in reality they were no longer venture capitalists because of their increasing fixation on certainty.
“The banks are even more risk adverse when it comes to investing in companies,” he said.
In terms of where BSS could head next, Robinson pointed to new companies it is launching to get a physical sales presence on the ground in Russia and Brazil. Like other companies eager to target emerging market growth, he has plans to expand throughout South America.
However, BSS will also target North America. “There are five million potential subscribers across that part of the world that we should really have a handle on,” he said.
