Due diligence deep dive into satellite telecom firm provides expert opinion that an investment might have limited upside for Key Family Partners.
Flow Partners performed a CDD deep dive into a satellite telecom firm, providing an expert opinion that an investment might have limited upside for Key Family Partners.
Geneva, SwitzerlandOverview
Swiss-based family office Key Family Partners ('KFP') was considering a significant investment in an undisclosed publicly traded satellite telecommunications provider with a leading position in services delivered by geo-stationary and medium earth orbit satellites to deliver both video and data services.
With an investment thesis that the business could be revolutionised with the launch of a low earth orbit product delivering much faster data speeds to areas with limited existing coverage, they required a quick expert assessment of whether the understanding of the potential technological impact was sound.
This engagement highlights our strong track record in the communications and telecom technology, having previously supported Key Family partners in the potential buy-and-build strategy in the FTTH (Fiber to the Home) space.
Transaction Background
Despite being a leading provider of satellite-based TV and data services worldwide, target had several years of negative revenue growth as streaming-based services such as Netflix and Amazon Prime Video resulted in 'cord-cutting' which accelerated during the pandemic due to a temporary pause in live sporting events. With a potential to shift to data-based services by launching low earth orbit satellites, KFP wanted to analyse whether the declining trends in the target company presented a lucrative investment opportunity.
Results
After considered due diligence on the target and it's recent strategy, we realised that the management team was focused on legacy GEO / MEO based satellite technologies, limiting their future potential for faster throughput services albeit while requiring far less capex from an entirely new satellite deployment. However, it was clear that this strategy was risky for the long-term defensibility of the company as consumers continue to move away to IP-based video services which are delivered increasingly via fibre or 4G/5G networks
Our opinion as of June 2021 was that the company had limited growth potential with a tight trading range of €5-10 likely to be a new norm, rather than a temporary blip. KFP decided to pass on the investment opportunity and as of December 2022 the stock price in the target was down 10% since our report.
About Key Family Partners
Founded by Hugues B. d'Annoux and Morten H. Kielland, Key Family Partners (KFP) is a Geneva-based multi-family office, serving high-net-worth families providing asset allocation, investment, risk management, reporting, administrative services, advisory on education, philanthropy, family governance and estate planning.
About Flow Partners
Flow Partners provides founder-friendly corporate finance and fractional CFO advice to technology entrepreneurs globally. Flow was founded in 2020 and operates globally with presence in London, Berlin, Warsaw and Miami.
For more information, please visit flowpartners.io.
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