The satellite industry has had a torrid time lately (and SES and Eutelsat’s numbers are out on July 29th) and one equity analyst, Giles Thorne from investment bank Jefferies, admits that the sector has been very bearish ever since Eutelsat’s profit warning in May.
But he praises Intelsat, and says that Jefferies have repeatedly argued that the market response to the Eutelsat results was an over-interpretation. “We found commentary from Intelsat on the call was consistent with our view, and also a source of positive developments for Intelsat.”
Thorne describes the Q1 reporting season for the satellite sector as being “tumultuous” and that’s no exaggeration. Eutelsat’s share price is still 36 per cent down on 6 months ago, while SES is 30 per cent off.
Intelsat has suffered a slightly different set of problems, not helped by its need to restructure a significant debt burden, now well underway and already helping saving cash for the operator. Thorne says: “Intelsat has kicked off the second quarter will a remarkably uneventful set of results. Revenue and EBITDA are both in-line with our expectations). Trends in the all critical Network Services segment have improved slightly. [Intelsat’s overall] guidance has been reiterated. And management soundings on the outlook for Epic have been robust.”
But investors marked Intelsat down 5.2 per cent to $2.32, and clearly not impressed by CEO Stephen Spengler reconfirmation that this year’s overall revenues will be on target at $2.14 billion – $2.2 billion. Intelsat’s overall transponder fill-rate is 76 per cent, slightly up on Q1.