The news that a C-band consortium (the C-Band Alliance/CBA) between Intelsat, SES, Eutelsat and Telesat of Canada has been formed to see the exploitation of their valuable C-band frequencies over the US, has resulted in a very positive report from investment bank Jefferies.
Giles Thorne, equity analyst at the bank, suggests that the initial 100 MHz of spectrum which would go to help propel 5G development in the US, is now likely to result in a joint proposal from the CBA consortium for 200 MHz to be released, and sold off.
Consequently, with double the spectrum under probably consideration, the bank has looked again at its expectations and forecasts for the key consortium members.
The bank reckons that the 200 MHz has been agreed internally within the consortium, which accepts that a 200 MHz release is technically feasible. “We think a 200 MHz commitment will emerge imminently: spectrum re-farming thrives or dies on an ecosystem’s appetite for change – bringing forward a better offer can only help momentum; equally, there is an incentive to bring forward the revised offer sooner rather than later.”
Jefferies also refer to the rising values being achieved in the Italian spectrum auctions, still ongoing but having reached €0.31-€0.34 per MHz ‘pop’.
The bank suggests that these prices – when translated to the US market – could result in a $66 billion benefit in gross proceeds. There are costs involved, of course, but the results could be a “startling $170 / €44 / €10 per share in post-tax net proceeds to Intelsat / SES / Eutelsat respectively,” says the bank, and for the first time puts the value of the C-band ‘windfall’ for Eutelsat at some €400 million.
Jefferies has increased its target prices for Intelsat to $36 (from $32), to €27 (from €26) and €29 for Eutelsat.