SES and Intelsat in $1.8bn C-band dispute

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SES is claiming $1.8 billion from Intelsat in an increasingly bitter dispute that is based on an alleged breach of fiduciary duty and which was wrapped up in the C-band process when both parties were involved in the C-Band Alliance.

Intelsat is alleging that SES deliberately misled the FCC in distorting an examination of the two businesses’ C-band coverage and operations over the US in order to gain a greater share of the FCC’s compensation payments for giving up their spectrum. Intelsat claims that the SES tactic worked.

Intelsat withdrew from the Alliance which was pursuing a joint-proposal for the Federal Communications Commission (FCC) to permit the restructuring of certain C-band frequencies over the US which would be used to drive the adoption of 5G. The FCC later announced its own scheme which Intelsat, SES, Telesat and Eutelsat have subsequently agreed to adopt.

Intelsat is in Chapter 11 bankruptcy reconstruction and in a 101-page filing to its bankruptcy court on October 19 fully rebutted the SES claim, saying it was an “astounding – and obviously inflated” action based on “meritless theories of breach of contract, breach of fiduciary duty, and unjust enrichment.”

The FCC awarded Intelsat 50.15 per cent of the compensation payment, but says that its actual share of the C-band market was 67 per cent for 2017 the year used by the Alliance to determine market share.

“Throughout 2018 and 2019, the CBA members, including Intelsat and SES, advocated and planned for the market-based approach, and stood ready to implement that approach upon final rulemaking by the FCC,” stated Intelsat in its filing to the court. “Because there is not and never will be a market-based approach as the CBA contemplated, future performance is impossible, and the purpose of the Agreement has been fundamentally frustrated, rendering [the claim] (even assuming it applies at all) unenforceable and/or void.”

The Intelsat rebuttal states that SES “cannot recover punitive damages at all [and does not] identify any misconduct of any kind by Intelsat….[and thus] its request for punitive damages is a non-starter”.

Intelsat asks the court to reject the claim in full.


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