Giles Thorne, media analyst at investment bank Jefferies, speaking about the eventual C-Band decision for the reallocation of spectrum over the US for 5G usage, sums up the position perfectly, saying ‘The C-Band Home Strait’ in his comprehensive report on the current state of play.
He admits that the past year or so has been “noisy, exciting, frustrating, confusing two years since Intelsat and Intel contributed to the original ‘Expanded use of the Mid-Band’ Notice of Inquiry, but adds that the transition to 5G is too big and important for the FCC to get wrong.
Thorne says that with the results season for the satellite industry’s ‘Big 3’ operators now over (Intelsat, SES and Eutelsat) it is now question of waiting for the FCC to issue its decision and all-important terms for the auction of spectrum – and including Telesat of Ottawa into the C-Band Alliance’s consortium.
Eutelsat, while holding around 5 per cent of the US spectrum from its Eutelsat Americas satellites, is not a member of the Alliance but will likely benefit from the FCC’s decision.
Thorne stated: “We expect to see the Order published before year-end (though with some tail risk), the kernel of which will be the C-band Proposal surrounded by a number of public-gallery-pleasing amendments (central to which will be the US Treasury voluntary contribution, we assumed 25 percent). This will then rapidly trigger the private auction (we assume in early 1H/20) and the final C-band denouement (cash flowing!) shortly thereafter. By the time the protagonists stand again, we would hope to have a solid C-band valuation bulwark to lean against.”
The bank sticks to its ‘BUY’ recommendation on SES (with a price target of €26) and says that SES has the most reason to be optimistic on its core business, and that its mix (of Video and Network) of business makes it the most favourable in the sector.
It holds its ‘BUY’ recommendation on Intelsat (at $30 target) but cautions investors that the business in “Only for the Brave”.
As for Eutelsat it gives the Paris-based operator a ‘BUY’ rating although says this is because of the C-Band exposure. Otherwise the company is “Clinging On”. Jefferies suggests a price target of €23.