Satnews Daily
September 22nd, 2019

UPDATE: Forrester Reports: C-Band Alliance Proposals Decision Day — Intelsat Discusses Loss of IS-29e — Intelsat Sues OneWeb

A report from investment bank Exane/BNPP suggests that ‘decision day’ for the C-Band Alliance (CBA) will soon hear from the Federal Communications Commission (FCC) with its verdict on the CBA’s proposals, this according to a new filing by journalist Chris Forrester at the Advanced Television infosite.

Our review of the FCC record suggests that alternative proposals to the CBA are not gaining traction. With the likes of Altice, Dish and Comcast likely to bid for C-band, the number of bidders looks greater than expected. This bodes well for pricing and suggests that market expectations on the C band outcome remains too conservative in our view. FCC newsflow on October 4th, 29th or November 21st could be a catalyst,” said the bank’s satellite analyst, Sami Kassab.

Chris Forrester.

The bank says it remains confident that satellite operators will soon be able to monetize their C-band spectrum usage rights. “Our review of the FCC record shows that alternative proposals are not gaining traction and have been opposed by major stakeholders such as Disney, AT&T, Verizon or the Church of Jesus Christ (a major operator of C-band Earth stations).”

Kassab added, “We also believe that Eutelsat is unlikely to hold out on the auction. It is not in its financial interest, in our view, and we believe its legal case to challenge a license modification under Section 316 looks thin. We argue that the number of large bidders for C-band spectrum could also surprise on the upside. In addition to Verizon, we see Comcast, Charter, Altice and Dish as interested in a large number of geographic areas (PEAs). This bodes well for pricing.”

Based on our C-band valuation analysis we believe that the market is currently far from pricing the favorable scenario we see for satellite operators. We argue that the market is currently assuming C-band price realization of around USD0.15 per Mhz POP (assuming SES core business is valued at 7.5x). We believe the large number of bidders could push prices towards our assumption of USD0.30 per Mhz POP,” said the bank.

The report stated that publication of the agenda of the FCC monthly meetings on October 4th (for the October 25th meeting), October 29th (for the November 19th meeting) or November 21st (for the December 12th meeting) could include reference to the C band proceeding and act as a positive catalyst for satellite share prices.

Chris is also reporting that Intelsat is already drifting an orbiting satellite in order to replace the lost IS-29e, which failed in April.

Speaking at a Goldman Sachs investor conference, CEO Steve Spengler said Intelsat expected to suffer a $70 million EBITDA hit from the loss of IS-29e at 50 degrees West which would translate into a $50 million revenue impact.

Spengler said the loss of the satellite needed a ‘multi-pronged’ response which as well as moving a satellite to the orbital location, a new satellite would be ordered by the end of this year, and that it would be supplied in a short time-frame.

Spengler gave some information as to the likely cost to C-Band Alliance members (Intelsat, SES and Telesat) of a favorable decision by the FCC to its proposed scheme for the auction of some C-band frequencies. Spengler said that it would cost between $1 billion-$2 billion to place new satellites into orbit and to supply and install around 90,000 filters to the Alliance’s cable and IP clients across the U.S. to ensure no interference.

The Alliance expects to have to buy eight smallsats, four from Intelsat and four from SES, to replace the lost capacity and maintain services to clients.

Here is something also highly interesting from Chris...

A potentially devastating dispute has broken out between two former “cooperation” joint-venture partners: Intelsat has filed a lawsuit against OneWeb and its financial backer Japan’s SoftBank.

The writ alleges that the OneWeb and SoftBank conspired together in stealing confidential information, because – the writ states – SoftBank no longer believed in the OneWeb project and was seeking to protect its previous investment in OneWeb.

Somewhat strangely, SoftBank had attempted to buy Intelsat, while Intelsat is a modest investor in the OneWeb project. This action commenced on last week in New York’s Supreme Court.