Echostar takeover promises bonanza for Kudelski

André Kudelski is expecting a rush of new business from the merger of Echostar and DirecTV swissinfo.ch

The Swiss technology group, Kudelski, is expecting to make a fortune out of a planned merger between Echostar and DirecTV.

If the merger of the United States-based satellite operators comes off, Kudelski predicts that demand for its digital technology software will rocket.

In an exclusive interview with swissinfo, CEO André Kudelski, said his firm’s net profit was likely to jump by as much as 50 per cent.

“Today Echostar is our first client worldwide, but DirecTV has a larger clientele than Echostar. I would expect an increase of 40 to 50 per cent in our net profit… if the merger is approved.”

If the deal gets US regulatory approval, Kudelski expects revenue to start increasing as early as the third quarter of this year, with most of the benefits coming through in 2004.

Ready to stump up cash

Indeed, so important is this merger to Kudelski that he is prepared to stump up as much as a “$1 billion to invest in Echostar to help it raise funds for the takeover.

The US satellite TV company is expected to pay about $27 billion (SFr46 billion) for rival DirecTV, which is owned by Hughes Electronics.

“We have today about half a billion dollars ready to invest,” Kudelski said, adding that any investment would be conditional first on the approval of the merger, and then on securing a long-term deal.

Unlike many Swiss companies, Kudelski has weathered the economic downturn well. Its 2001 results are due out within the next few weeks and analysts are expecting net profit to rise by 24 per cent over last year to SFr82 million.

Kudelski itself is sticking to its forecast of a similar rise in net profit and revenue growth of 25 per cent.

On prospects for this year, André Kudelski is keeping his cards close to his chest. “It’s too early to say what will happen this year,” he told swissinfo. “After the events of September 11 we were concerned about the US, but it’s developing pretty well, as is Asia. Our main concern at the moment is Europe.”

Staying Swiss

Despite its global reach, Kudelski remains very much a Swiss company and the boss intends to keep it that way.

The firm employs 1,200 staff worldwide with 771 working at its headquarters in canton Vaud.

It was founded in 1951 by André Kudelski’s father, and cemented itself as a niche provider of audio technology – the company’s Nagra recording equipment was used by a generation of journalists.

By the early 1990s, with alternative technologies appearing and prices falling, the son decided it was time to diversify into digital TV software and smart cards. In the past ten years, the group has increased its turnover by a factor of more than 15 and profitability has consistently improved.

by Tom O’Brien