Intelsat: “Imbalance of supply and demand”
October 30, 2015
Stephen Spengler, CEO at Intelsat, told analysts that the satellite industry in general is suffering an imbalance in supply over demand. “We have an imbalance of supply and demand globally in pretty much most regions that relates to traditional satellite capacity. It’s a tougher environment from a pricing standpoint as a result. What’s coming up in the future is the development of newer capacity, high throughput capacity, more optimized capacity for the future opportunities.”
As far as Intelsat is concerned, Spengler added there was an upside to the over-supply problem. “First thing I would say is different is that the opportunity that we see in the marketplace for future applications is considerable. If you look at mobility, if you look at corporate networking and wireless infrastructure, government, Internet of Things, we see a $3 billion opportunity overall. And so we see a growth opportunity ahead that is substantial. That wasn’t always there in the past.”
“We have [designed] the Intelsat Epic system intentionally with a better capability to generate revenue from less OpEx expenditure. So we get more revenue per dollar of OpEx from this fleet. That allows us to have a business case – intentionally, to have a business case where we can be flexible on pricing in the future, where we can drive volume for large users of capacity.”
Spengler added that one recent set of major contracts for its upcoming Intelsat ‘Epic’ I-29 came from 3 clients, and were worth a half-billion dollars. Moreover, one additional contract was worth even more. “The three deals that we talked about aggregate [at] $0.5 billion, what we’re saying is that this new deal is larger than any one of those individual deals,” confirmed CFO Michael McDonnell.
Intelsat’s share price which has been under extreme pressure over the past few weeks, recovered somewhat, rising 13.2 per cent in later trading on October 29th to $7.15.