Intelsat still losing money

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Intelsat has reported total revenue of $542.8 million (€478.6m) and net loss of $111.3 million for the three months ended December 31st 2018. For the full year, Intelsat reported total revenue of $2,161.2 million and net loss of $599.6 million.

Those cold numbers reflect much of what the market was expecting. Stephen Spengler, CEO said that the operator’s 2019 priorities were to focus on its high-throughput fleet of ‘EPIC’ satellites, and to continue working hard to clear – with SES – 200 MHz of spectrum over the US for repurposing and sale for 5G.

Equity analysts at investment bank Exane/BNPP said the results were disappointing. “Q4/18 revenues of $543 million declined by 4 per cent y-o-y driven by lower renewals and lower pricing in Government, Media and Networks. This was broadly in line with consensus expectations. Pricing pressure in Government and Networks for wide beam capacity is presented as the main driver of the revenue pressure. Lower volume consumption in the US and Latin America is given as the main driver of the decline in Media.  Intelsat’s contracted backlog (adjusted for ASC 606 accounting changes) fell from $7.3 billion at the end of September 2018 to $7.1 billion at the end of December.”

In terms of 2019 outlook, Intelsat is guiding for revenues and EBITDA that are respectively 3 per cent and 5 per cent below current consensus forecasts. This reflects a guided decline of 3 to 6 percent in Media, 3 to 6 per cent in Networks and -1 to +2 per cent revenue growth in Government. Increased direct costs and lower revenues explain the comparatively disappointing EBITDA outlook.

Exane’s analyst Sami Kassab said there are important lessons for Europe’s two satellite players (SES and Eutelsat). “Intelsat Q4/18 brings home the intense pricing pressure that the industry is suffering from especially for wide beam capacity. While the read across is negative for European satellite operators, we note that each player has its own specificities that drive differences in operating trends. Intelsat has historically been more exposed to Trunking and cable distribution, structurally more challenged segments. Volume reductions in video capacity consumption is partly reflective of its US cable distribution focus. Eutelsat volume consumption is growing as per management statement and our own independent tracking. SES Networks has been a growth driver throughout 2018 as it has gained share thanks to lower priced higher capacity services.”


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