Bermuda-registered satellite operator Intelsat has launched a bid to buy Eutelsat Sa, Europe's largest satellite-services company, the Wall Street Journal reported this week.

Intelsat, the world's second largest satellite operator is competing with Pan AmSat, the world's third largest, in the buy-out talks, sources told the newspaper.

"The talks are likely to drag on for weeks, and so far only Intelsat has submitted a formal offer, described by these officials as a hostile bid totalling $3.5 billion to $4 billion," the Wall Street Journal said. "But a deal with either suitor would significantly accelerate the industry consolidation already underway and create an international powerhouse, with a combined fleet of at least 38 satellites and annual revenue of more than $1.5 billion. Its size and geographic reach would reshape the industry, which already is in turmoil due to excess capacity and falling stock prices."

If Eutelsat, of Paris, combined with either Intelsat, incorporated in Bermuda but with headquarters in Washington, D.C., or PanAmSat, of Wilton, Connecticut., the new entity would rival SES Global SA of Luxembourg, the industry heavyweight with 29 wholly owned satellites plus stakes in 13 others. SES touched off the consolidation trend in 2000 by acquiring General Electric Co.'s satellite-services unit in a friendly transaction.