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Intelsat suffers market downgrades

April 2, 2020

Investment bank Goldman Sachs is the latest to downgrade its advice to clients who hold Intelsat shares. The advice is ‘SELL’ and comes just a few days after the March 27th advice from Cowan’s analyst Lance Vitanza also alerted clients with a Target Price of $1 for Intelsat’s stock, a significantly lowered target from the actual $1.53 price on April 1st.

However, Intelsat’s ever-downward trajectory seems as clear as ever. In the past 5 trading days its NYSE value has tumbled from $2.10 a share to just $1.29. At one point they hit $1.21. On April 1st its price fell 15.7 per cent. A month ago, on March 2nd a share was worth $3.64. Back in October they were valued at $26. The declines put a market capitalisation of just $182 million on the business.

But the October values were assuming that Intelsat would pick up around $4.85 billion for its C-band licenses and as part of the SES/Telesat and Eutelsat move to free up C-band spectrum over the US for use by the ever-hungry 5G operators.

It is currently extremely unclear what Intelsat’s intentions are. Focus on the Coronavirus has taken the market’s eyes away from the calendar, other than gossip from SES is that they continue to work towards the December 2020 timeline mandated by the FCC.

Intelsat has a massive millstone around its neck in the form of some $14 billion in debt and borrowings.

On February 18th investment consortium Appaloosa Management took a 7 per cent stake in Intelsat and sent a letter to the company stating they were dissatisfied with the C-band auction’s proposed payout and saying that Intelsat should instead bankrupt itself, and restructure. Shares surged 18 per cent higher in a single day as investors sensed a healthier payout.

But since then there’s been zero news out of the company. And that uncertainty has certainly led to the current crop of downgrades. Former shareholders BC Partners and Silver Lake Partners managed to sell significant slices of their Intelsat holdings in November (and at around $24) – which might also lead to SEC investigations.

Other recent large shareholders still include BC Partners and Silver Lake as well as Discovery Capital Management and Invesco.

However, SES is not free from shareholders and their evaporating sentiment. In the same fashion as Intelsat, SES share price fell 5 per cent on April 1 to €5.07. A week ago, on March 26th they traded at €5.90. A month ago, on March 4th they were €7.61 and back in October worth almost €18 a share.

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