Analyst: SES/Intelsat claim update

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On July 15th it was reported that SES Americom was arguing with Intelsat’s bankruptcy court that Intelsat should pay $1.8 billion to SES because of a “contract violation” over the pair’s C-band Alliance (CBA) agreement and the clearance of spectrum for 5G.

Following the news, satellite analyst Sami Kassab from investment bank Exane/BNPP issued a guidance note to clients, saying the bank understands that there was a legally-binding agreement in place between C-band members on how proceeds would be broken down between members and how the CBA would operate. SES claims Intelsat breached that agreement.

“Throughout the C band process, consensus (based on Intelsat rough guidance) assumed that Intelsat and SES would get the same share of C band proceeds (probably reflecting the perceived nature of the CBA agreement). However, the FCC ultimately awarded $897 million more to Intelsat than to SES in its final order. SES is claiming compensatory damage of $450 million (which is half the $897 million excess proceeds Intelsat is due to receive). In addition, SES is claiming punitive damage worth a typical 3x the compensatory damage claim (ie $1350 million),” says the bank.

“We note however that the total C band breakdown has been decided by the FCC and not by a satellite operator. The breakdown has been accepted by all operators. We believe this is likely to be the defense strategy Intelsat will adopt,” adds Exane/BNPP.

“We do not expect any delays to the timing of C band clearing and payments from this legal development. SES reports on August 7th,” concludes the bank.


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