Report: $10bn cash windfall for SES and Intelsat

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A major 37-page report from equity analysts at investment bank Jefferies says the proposed restructuring of scarce satellite C-band frequencies over the US in order to help drive adoption of 5G cellular telephony, could result in a $10 billion cash windfall “at least” for the two main proponents of the scheme, SES and Intelsat.

The report, authored by analyst Giles Thorne, says that the 5G industry has recognised that the C-band proposals are the optimal “if not only” way for the US to guarantee any sort of global leadership. Indeed, the report says it is no longer an “if” or “when” proposal, but “how?”.

The bank’s comprehensive report says: “Because Intelsat / SES’s negotiating leverage is so strong (because the FCC has no means of compelling them to act in a manner that they don’t want) and the stakes so high (win / lose the race to 5G), we expect an approximate of the Joint Proposal to appear in an FCC order in 1H19 with only the fettering of a two-stage auction process (similar to the broadcast incentive auction, where it was proven that the “bad politics” of spectrum windfalls can be navigated with all reputations intact). We see reason for all MNOs to be interested (especially AT&T and Verizon). Precedent spectrum auctions can flatter to deceive on valuation, so we proceed very cautiously.”

Cautious the bank may be, but nevertheless it values the benefit to SES and Intelsat as being worth some $3.5 billion to each operator. But if the FCC and the SES/Intelsat consortium agree to reassign 200 MHz (currently only 100 MHs is on the table) and that a price of $0.50 per MHz ‘pop’ (a standard industry measurement, and where it equates one MHz of bandwidth passing one person in the coverage area in a spectrum licence) is reached, then the rewards to SES and Intelsat could be much greater.


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