Intelsat has entered into a Joint Venture (JV) with a South African investor group led by Convergence Partners that will utilise project financing to build and launch a new satellite into the 33º East orbital location, thereby ideally positioned to serve the African continent. The satellite, to be called Intelsat New Dawn, will feature a payload optimised to deliver wireless backhaul, broadband and television programming to the continent and is expected to enter service in early 2011. The satellite will be operated and marketed as part of the global Intelsat fleet.
Africa has been one of the fastest growing regions for fixed satellite services in recent years, fueled by demand for critical infrastructure from communications providers and television programmers. Wireless telecom operators, broadband service providers, corporate network service providers and direct-to-home television operators have experienced growth along with the economic development of the region. The New Dawn JV was established to provide solutions for African communication needs, and is expected to deliver new capacity for voice, wireless backhaul, Internet and media applications.
The JV recently concluded agreements for financing of the project, which is expected to cost a total of about US$250 million. Funding will be approximately 15% with equity and 85% with debt, the debt being in the form of non-recourse project financing provided by African institutions. Nedbank Capital, part of the Nedbank Group (one of South Africa's largest banking groups) and a leading telecom project financier in South Africa has arranged the debt financing. Nedbank and the Industrial Development Corporation of South Africa, a self-financing national development finance institution, are the largest participants in the debt funding consortium. The equity is to be provided by Intelsat (74.9%) and the Convergence Partners-led group (25.1%), which also includes Altirah Telecoms. Intelsat's cash contribution to the project is expected to be approximately US$25 million.
Over 50% of the satellite's 28 C- and 24 Ku-band 36 MHz transponder units are under contract, with pre-launch commitments received from leading wireless, network and video service providers such as Vodacom International, Gateway Communications Africa (UK), Zain Nigeria and Gilat Satcom. Pre-orders for satellite capacity, or backlog, currently total more than US$350 million, with some contracts for up to 15 years of service on the satellite.
Andile Ngcaba, Chairman of Convergence Partners said, "Today marks an important milestone in the development of Africa's infrastructure. The New Dawn JV, with its optimised satellite and African-led financing, represents a solution for Africa by Africa.
Over the course of this satellite's life, it will provide world-class connectivity, allowing businesses to grow and rural communities to connect. Convergence Partners believes that investments in African projects of this nature can offer superior returns while also accelerating the socio-economic development of the continent."
Manufacture and launch of the Intelsat New Dawn satellite is expected to be completed by 2010, after which the satellite will join the other 25 satellites within Intelsat's global fleet that provide Africa with critical transmission services.
* Convergence Partners is a South African-based investment company focused on the telecommunications, media and technology sector, predominantly in Africa and the Middle East. Investment philosophy is to take meaningful equity stakes in quality projects and businesses within its chosen sector and act as an active, strategic value-adding investor. As a major part of its strategy, Convergence Partners focuses on greenfields projects that improve access to communications, broadband services and technology offerings throughout Africa and thereby contribute to enhanced standards of living.
** Altirah Telecoms is the common investment vehicle of Altirah Capital and the Oppenheimer family's private equity portfolio, which has been set up for the New Dawn satellite JV. Altirah Capital is a South African-based investment company which focuses on private equity, venture capital, hedge funds and structured products.
Altirah Capital's principal partners are David Frankel, one of the co-founders and former CEO of the Internet Solution Group and the "South African Technology Achiever of the Century" as voted by the Financial Mail in 2000, and Paul Salomon, former investment banker.
*** Nedbank Capital is the investment banking business of the Nedbank Group, one of the four largest banking groups in South Africa. The investment bank has a dedicated Infrastructure Project Finance unit, with dedicated teams specialising in providing financing solutions to sectors such as transportation, telecoms, social infrastructure, Public-Private-Partnerships, industrial processes and African commercial real estate projects.
**** Industrial Development Corporation of South Africa is a self-financing, South African state-owned national development finance institution that provides finance to promote industrial and entrepreneurial development. The IDC identifies and funds projects in partnership with others and focuses on promoting and investing in viable new industries and differentiates itself through risk taking and flexibility in structuring, particularly in promotion of SMEs, regional investment diversification and job creation.
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