Intelsat C-band support from Morgan Stanley

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Investment bank Morgan Stanley has issued a strongly supportive note on Intelsat’s (and by implication SES) prospects for the restructuring of 200 MHz of C-band spectrum over the US.

The bank says that even though there is still much which could derail the proposals, it nevertheless believes that “the C-Band plan is likely the only feasible way to get the spectrum transferred during the life of this administration, as a move to an alternative process would likely move past the next election.”

The note says it still believes that the FCC will issue its decision in the middle of the year “as the last word from the FCC was [that] they wanted to get an order out in the second quarter of 2019.”

The bank admits that the FCC, even if they approve the C-band scheme, could insist on a number of financial outcomes, not all wholly beneficial to Intelsat (and SES).

Morgan Stanley place an average valuation on the spectrum of some 32 cents/MHz pop, which equates to a thumping $18 billion in gross revenues. Intelsat (and SES) will have to supply and install alternate reception equipment and filters to thousands to cable and IP head-ends in order to seamlessly transition their existing clients to alternate frequencies.

There will also be around 6 new satellites (3 from Intelsat, 3 from SES) to create new bandwidth, plus taxes to be paid on the ‘windfall’.

Once these costs have been taken into account, Morgan Stanley sees the net benefit to Intelsat of some $5 million, which would go some way to reducing Intelsat’s overall borrowings. The same would apply to SES.

As at March 8th, however, SES’ share price was unresponsive (up 0.1 per cent) at €15.42.


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