(Newsbytes via NewsEdge) Washington's Intelsat will become the world's largest commercial satellite operator when it completes its purchase of PanAmSat Holding, the firm that has been its toughest domestic competitor.
The deal to buy its long-time rival creates a company that will carry about a quarter of the world's commercial satellite-delivered television programming on a fleet of 51 satellites, and can reach 99% of the world's populated areas with communications services.
Intelsat and PanAmSat had flirted with a merger before, but each time the rivalry between the two proved to be too deep to make a deal.
Last August, the companies worked out their differences and settled on a $6.4-billion acquisition, which included the assumption by Intelsat of about $3.2 billion worth of PanAmSat's debt.
If the deal closes as scheduled today, PanAmSat will become a wholly owned subsidiary of Intelsat, and its stock-ticker symbol will disappear from the New York Stock Exchange.
But the combined company will lose money. PanAmSat earned $72.7 million last year, but Intelsat lost far more, about $325 million. Already deep in debt, Intelsat is borrowing heavily to finance the purchase.
Intelsat chief executive David McGlade said that given the level of debt and interest payments, the company did not expect to become profitable in the foreseeable future. He said the company's investors had been pleased with Intelsat's positive cash flow and its heavy backlog of orders.
Intelsat executives said the merger, approved by government officials from several agencies, consolidated companies with different strengths at a time when they expected demand for satellite services to grow rapidly.
The traditional core of Intelsat's business has been telecom, a rough arena in recent years.