Intelsat under extreme capitalisation pressure
December 1, 2015
Intelsat’s share price fell on November 30th a thumping 10.06 per cent to a mere $4.65 a share. The collapse means that Intelsat’s market capitalisation is now down to $490 million (according to Bloomberg), and this is considered far too close to a market capitulation. This, in financial terms, implies that many shareholders have simply given up on the stock, and are exiting at any price.
It is worth stressing that the past week has not been favourable to satellite stocks in general. Eutelsat, which is holding an ‘Investors Day’ in Paris on December 1st, has also been on something of a roller-coaster and has fluctuated this past week from €28.4 to €27.9 – and back again. But Eutelsat has a €6.41 billion market capitalisation.
It’s a similar situation at Luxembourg-based SES which has also been in volatile territory (past week falls from €27 down to €26.20), but again SES has a healthy €11.23 billion market cap.
One of the main problems leading to a lack of confidence in Intelsat is its debt burden, of about $14.76 billion. Eutelsat’s debt is miniscule in comparison (€55m) and SES’s debt is a manageable €4.4 billion.
Investors and market commentators have been anticipating a sell-off of Intelsat assets, and any asset disposal – while reducing its debt – would also mean a reduction in revenues from those assets.