Sami Kassab, a media analyst at investment bank Exane/BNPP last week held a variety of meetings in Washington DC in connection with the C-Band Alliance’s plan for the auction of satellite spectrum over the US for re-use by the 5G industry.
Kassab met with a couple of opponents to the scheme as well as key representatives of the FCC and Intelsat. Also on his interview manifest was the American Cable Association.
Two highly vocal opponents of the CBA’s strategy are Senators John Kennedy and Roger Wicker. Kassab says that these Congressional leaders agree that Satellite operators have enforceable rights and are needed for the transition, and there’s a need to incentivize the satellite operators to ensure a smooth auction and transition.
Kassab’s report says: “We understand that Senator Wicker is not willing to compromise on the 50 per cent satellite share of its 5G spectrum Act. Senator Kennedy appears willing to negotiate up and considers a payment of $5-15 billion depending on total auction proceeds as appropriate. A joint statement between Wicker and Kennedy in the coming days is a likely way forward to unite the Republican party on C-band and provide political cover to the FCC.”
However, following his talks with the FCC, Kassab says: “We heard from Republican FCC Commissioner O’Rielly that the FCC was likely to act before Congress. The appointment of the transition facilitator (in particular the precise role of the CBA) and detailed aspects of the technical transition and the distribution of assets (Small Satellite Operators) are seen to have enforceable rights) are the key remaining outstanding issues. A 30-50 percent share for satellite operators is a very likely outcome in our view. Depending on the ultimate share, clearing costs could be funded by the Treasury share. February 6/7th and March 10th are key dates to watch.”
In summary, Kassab says: “SES looks to be the most attractive vehicle to play C-band.”
He adds that investor sentiment on C-band remains low, but confirms the view that that satellite operators will be incentivised by the FCC. However, Kassab says that Eutelsat’s allocation key is unlikely to be adopted by the FCC.
“The FCC claims they have the regulatory power to mandate the accelerated clearing fee proposed by the CBA. Of all C-band satellite operators, we believe SES offers the most attractive industry positioning and C-band optionality,” states Kassab.
In trading on January 27th Eutelsat’s share price crashed 2.31 per cent at one point although settled at a fall on the day of about 2.11 per cent. SES also fell but by around 0.86 per cent.