July 17th was a tough day for Intelsat shareholders, with the satellite operator’s Common share price falling to a 52-week ‘low’ touching just $8.69. It finished the day at $8.71 a share, but this is down dramatically over the past month or so. Back three months and the share price was at $12.59, but confidence in the company’s business prospects seem to have evaporated recently.
Intelsat will announce its Q2 earnings statement and analysts’ tele-conference on July 30th. One analyst, commenting on July 18th, said it would be interesting to see whether on Monday when the market re-opened the stock’s ultra-low price represented a buying opportunity.
Investment bank Jefferies (in a July 14th note) talked about the operator’s “Network Services” division and suggested that “headwinds” might start to re-build during Q2 (guidance is for a 7-10 per cent decline y-o-y). Jefferies is also concerned that digital compression in the “inherently more stable” media division could be starting to affect a growing number of Intelsat’s analogue services.
“Lower demand from certain of our North American media customers as they use compression and other techniques to reduce transmission requirements for some programming,” said Intelsat, and repeated in Jefferies note to investors.
Intelsat’s guidance in ‘Media’ is for 2-3 per cent growth y-o-y.
However, the market is anticipating hearing more during the conference call on Intelsat’s modest $25 million investment in Greg Wyler’s OneWeb satellite constellation. “[This] positions the business to participate in meaningful upside should OneWeb endure. At this stage, we would be looking to hear management’s view on the likelihood of OneWeb ‘happening’ and what the exact nature of the complementarity between Epic and HTS-LEO could be,” states Jefferies.