Europe Satellite Titan Nears Reality

EUROPE SATELLITE TITAN NEARS REALITY
[SOURCE: Wall Street Journal, AUTHOR: Andy Pasztor andy.pasztor@wsj.com]
After years of fruitless consolidation efforts marked by national squabbling, Europe's two largest satellite makers are picking up momentum toward creating a single, dominant regional manufacturer, according to industry and government officials. France's Thales SA, a manufacturer of aircraft systems, air-traffic-control equipment and a wide array of military hardware, appears to have the clout and the staying power to form what is projected to become Europe's satellite powerhouse. Thales is slated to take over the satellite operations of Alcatel SA by the end of the year. Even before that transaction closes, industry officials said, Thales chief Denis Ranque has begun planning and lobbying to eventually snare the Astrium satellite-making unit of European Aeronautic Defence & Space Co. Though political and industrial hurdles remain, these officials said, a consensus seems to be emerging that such a combination not only is inevitable but conditions for it have improved in recent months. The situation is striking because Thales, the company poised to run the anticipated combination with a projected annual revenue of more than $4.4 billion in satellite-construction work doesn't build any satellites. The push to merge the satellite operations of Alcatel and EADS reflects the limited budgets in the European Union for military and research satellites. Such an entity would have operations throughout Europe, enjoy a virtual monopoly over publicly funded European satellite projects, and control more than one-third of the global market for commercial telecommunications satellites. A combination could give the two greater leverage in dealing with customers, from governments to satellite operators who distribute entertainment and data to residential and business customers.
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