Advanced Television

Taiwan C-band auction is solid news for SES

January 8, 2020

The auction results for 5G spectrum in Taiwan are already worth an impressive $0.51 per MHz ‘pop’. The strong bids for capacity came from shrewd local operators such as Chunghwa Telecom, FarEasTone, Taiwan Mobile, Asia-Pacific Telecom and Taiwan Star.

New Street Research argued that should this bidding rate be matched in the upcoming auction for C-band capacity in the US then the anticipated value for Intelsat, for example, could be worth an impressive $34 per share. Now Deutsche Bank has come up with its own thinking, and says the Taiwanese bidding is well above its own previous maximum of 34c per MHz ‘Pop’ for US spectrum.

“At the Taiwanese level, the implied value of US C-Band sale would be $41 billion (vs our current assumption of $32 billion) and share for SES $15 billion vs our current assumption of €11.6 billion,” says the bank’s note to investors.

However, the report rightly says that there’s a major unknown in how much of this ‘windfall’ SES, Intelsat and Canada’s Telesat will be able to hold onto. The FCC will be organising the auction, and the C-Band Alliance has already implied that it will be happy to agree that some of the proceeds can be retained by the US Treasury.

The bank says: “The net proceeds of €4.3 billion for SES would be 32 per cent higher than €3.2 billion included in our current target price and the value p/share would be €9 p/sh vs €7p/sh in our Target Price. This would imply a SES valuation of €20 p/sh; 60 per cent upside (vs current Target Price of €18, 42 per cent upside).”

However, the market seemingly ignored the bank’s advice and January 7th saw SES share price fall almost 1 per cent to just €12.59 per share.

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