Hong Kong-based satellite communications provider SpeedCast has expanded its bolt-on acquisition strategy outside of its core Asia-Pacific market with the purchase of Africa focused Geolink Satellite Services from the CETel Group.
SpeedCast paid €7.4m…
Hong Kong-based satellite communications provider SpeedCast has expanded its bolt-on acquisition strategy outside of its core Asia-Pacific market with the purchase of Africa focused Geolink Satellite Services from the CETel Group.
SpeedCast paid €7.4m (US$8.4m) in cash for the business and will the fund the deal through its existing US$55m senior secured credit facility that it raised in July 2013. As of 31 December 2014, 69% of the loan had been drawn.
SpeedCast said that the acquisition will bolster its capabilities in the African region as well as strengthen its position in the maritime and energy sectors.
Founded in 1991 and headquartered in Paris, Geolink has established a strong presence in Africa, particularly in the French speaking countries. Its product portfolio is predominantly split between fixed VSAT solutions serving NGOs, oil & gas, mining and media industries, and mobile satellite solutions for the maritime sector using Inmarsat and Iridium’s systems.
Geolink generated sales of €9.7m (US$11m) in 2014 and according to SpeedCast has reported EBIDTA growth for the past three years.
Commenting on the transaction, Pierre-Jean Beylier, CEO of SpeedCast, said: “With the Geolink acquisition, SpeedCast expands its presence and its capabilities in the African market.
“Geolink uniquely complements SpeedCast’s business with great strength in mobile satellite services, extensive experience in and satellite coverage over Africa, and strong customer base in the energy and maritime sectors. There are interesting synergies between the two companies, which will further enhance our ability to deliver complete end-to-end solutions to our respective customers globally.”
The acquisition is SpeedCast’s sixth since private equity group TA Associates took control of the company in September 2012 in a US$32m deal.
To date, SpeedCast has mainly focused on buying out teleport owners across Asia. In the past 12 months it has snapped up Papua New Guinea-focused satellite solutions firm Oceanic Broadband and teleport owner SatComms Australia.
Last August, the company completed an IPO on the Australian Stock Exchange raising around A$150m (US$138.86m) from selling around 63.7% of its stock. TA Associates as well as SpeedCast’s directors hold the reminder.
The company recently reported its first public results for full year 2014. It recorded a 9.2% year-on-year increase in revenues to A$121.5m and 18.3% rise in EBITDA to A$20.7, despite a more than 50% decline in its Afghanistan satellite services revenues. SpeedCast said that high growth in its maritime business meant that it was now its largest vertical, ahead of telecom.
The company added that it maintains a strong balance sheet with a leverage ratio of 1.5 times (below its 1.75 – 2.25x target ), giving it further capacity for bolt-on acquisitions in what it sees as a fragmented market.
A perennial takeover target
Geolink has proved a popular acquisition target over recent years with its position in the fast growing African market attracting bidders from across the globe.
In early 2007, the company was snapped up by SeaMobile/MTN and was renamed SeaMobile Europe.
Four year later, CETel, a Germany-based satellite communication services provider, bought SeaMobile Europe and changed its name back to Geolink.
