Intelsat has yet to formally apply for Chapter 11 bankruptcy and undoubtedly its situation is precarious and thus highly fluid although a bankruptcy restructuring is now widely expected given that it has declined to make interim interest payments on a 2024-due bond and has used a permitted 30-day delay in making the payment.
Intelsat is also seeking a $750 million potential bankruptcy loan [as “debtor in possession”] in order to prepare for the FCC auction of C-band spectrum in December. This suggests that within the next few weeks more detail will emerge and potentially include a debt-for-equity swap on a restructured business. Intelsat has around $800 million in cash in its accounts (as at December 31st). It has also slipped by a month its Q1 results announcement.
US telco and cable giant (8th largest in US), Frontier Communications, on April 15th reached a Chapter 11 restructuring agreement which reduced its debt burden by $10 billion. In essence Frontier struck an agreement with more than 75 per cent of bondholders and announced it had secured some $460 million of Debtor in Possession operating funding. A similar structure for Intelsat would not be impossible.
However, newsflow from Intelsat is limited and not helping matters – as far as journalists are concerned – is that Dianne VanBeber, the company’s head/VP of Investor Relations, has left the company
Pending that bankruptcy decision a well-sourced equity report by Zacks Equity Research says that Intelsat is focusing on five operational priorities, which are likely to stabilize its core business, improve competitive position, return it to growth and optimise asset value.
Firstly, says Zachs, the company aims to leverage all assets within its global network for maximum return. Intelsat further intends to scale up its managed services across enterprises, maritime, business jet commercial and aeronautical government opportunities, and build powerful distribution channels to amplify its direct marketing efforts.
Additionally, Zachs states Intelsat expects to lead the industry in seamless implementation of satellite-based telecommunication solutions with state-of-the-art infrastructure. Intelsat aims to invest in and develop standards-based terminals and ground hardware, and innovative and software-defined technology. The company also intends to participate in 3GPP [the 3rd Generation Partnership Project] and other broad telecom sector standards development. In addition, it intends to maintain a disciplined stance on cash flow management and enhance the productivity of its deployed capital. Last but not the least, the company expects to optimise its spectrum rights to maintain sector leadership and provide regulatory and operational guidance based on market experience.
“[Intelsat] intends to boost revenues by driving stability in the core business, employing a disciplined yield management approach and emphasising the development of strong distribution channels for its four primary customer sets of broadband, mobility, media and government. Intelsat believes that developing differentiated managed services and investing in related software and standards-based technology will help enhance its relevance within the broader telecommunications landscape,” adds Zachs.