Study of Intelsat

Study of Intelsat

• 02/18/2020 – Tepper owns 7.4% of Intelsat and urges them to fight for better compensation. The story might not end yet. We will wait and see. As we can see, Tepper is a really deep value guys and he has the guts to do deep fishing.

Appaloosa Sends Letter to Intelsat Board of Directors With Respect to FCC’s Recent C-band Spectrum Auction Proposal

Urges Company to Withhold Acceptance of FCC Order Pending Negotiation of an Agreement on Fair Commercial Terms

Appaloosa LP, which beneficially owns approximately 7.4% of Intelsat’s (NYSE: I) common stock, today sent a letter to Intelsat’s Board of Directors urging the Company to withhold acceptance of the Federal Communications Commission’s (FCC) Order detailing the FCC’s approach to clearing C-band spectrum in an upcoming auction until fair commercial terms can be negotiated.

The full text of the letter follows:

February 18, 2020

Ladies and Gentlemen –

We write regarding recent events surrounding the Federal Communications Commission’s (FCC) plans to clear and auction C-band spectrum currently licensed to Intelsat and other satellite operators. We are disappointed, to say the least, with the Board’s and management’s apparent acquiescence to the broad terms of the FCC’s latest proposal, which was clearly motivated by political considerations. The token compensation offered to Intelsat is an affront when compared to the values achieved in auctions of comparable spectrum across the globe over the past decade.

Setting aside the issue of valuation for the moment, we nonetheless commend the Board for forestalling a final embrace of the proposal, as its mechanical terms are manifestly unfair to Intelsat. The FCC’s proposed Order imposes several onerous provisions that inappropriately subsidize the prospective overlay licensees, and by extension, the FCC. Among the most egregious of these terms:

(1) The Order requires the satellite operators to front billions of dollars of expenditures in order to clear spectrum for the benefit of an FCC auction that is not expected to begin until December 8^th, 2020 — and for which reimbursement seemingly will not begin to occur until May 2021 at the earliest.

(2) The Order’s split of Accelerated Relocation Payments to Phases I & II of 25% and 75%, respectively, unfairly “back-ends” the satellite operators’ compensation and is disproportionate to the amount of spectrum cleared in the two phases (36% and 64%). Moreover, it is likely that the most useful and valuable portions of spectrum cleared will be in Phase I.

(3) The FCC’s requirement that an operator post a letter of credit in order to receive a Phase I Accelerated Relocation Payment subjects them to an all-or-none requirement to clear its spectrum by September 2023 (the Phase II deadline). Thus, failure to clear even a de minimis portion of the requisite spectrum exposes the operators to massive financial loss and provides a windfall to the overlay licensees on a potential technicality.

Taken together, these terms impose upon Intelsat the full weight of financial and execution risks related to a process that is likely to yield benefits for the FCC and US Government many times greater than those afforded the Company. For a highly leveraged operator, such as Intelsat in particular, the cash required to conduct that process imposes a hardship that could easily trigger an insolvency before relocation can be accomplished.

IN SUCH CASE, THESE PROVISIONS APPEAR COUNTERPRODUCTIVE TO EVEN THE FCC’s PURPOSES – NOT TO MENTION THE US GOVERNMENT’S GOAL OF EXPEDITING THE CONSTRUCTION OF A LEADING EDGE 5G NETWORK.

Given these circumstances, Intelsat cannot bear the risks associated with the current Order as it is structured. We urge you to withhold acceptance pending negotiation of an agreement with the FCC on fair commercial terms. Failing that, we believe the Board has no choice but to resort to bankruptcy and litigation in order to protect Intelsat’s valuable license rights from an illegal modification.

Sincerely,
Appaloosa LP
David A. Tepper
President

• 02/06/2020 – here comes the deal for CBA and FCC $9.7 bil compensation and $3.3 ~5.2 bil for expedition (Speech: FCC Chairman Pai to Announce C-Band Auction Plan for 5G). Timing of the payments is critical. The $3-5 billion relocation costs will be paid by the successful auction bidders in 12/20. The $9.7 billion incentive payments are only received as the spectrum is repurposed with final payment in 2023. Full details coming tomorrow. The stock price of Intelsat shot up 61% then down -2% then back 9% and then oscillated and was installed for trading for about two times (this might be the first time I experience halting on trading) , I was afraid to get the zero then sold my share at $3.65 with a small gain of 5%. Not too good. – I think the deal is not bad for Intelsat, but I think the main reason why Intelsat does not jump too much is its very poor balance sheet and poor future growth perspective. So it is not a good long term investment. I planned to do this short term but could not catch well with the violent momentum trading and caught close to the today’s bottom.

Intelsat Reaches Deal With the FCC on C-Band Airwaves

(Bloomberg) — Intelsat SA and other satellite providers would share as much as $14.9 billion under a proposal from federal regulators to compensate them for giving up airwaves in an auction to wireless companies.

The U.S. Federal Communications Commission plan announced Thursday would provide $9.7 billion in compensation to Intelsat, SES SA and other companies for leaving the airwaves quickly, and another $3.3 billion to $5.2 billion to pay for costs of making the switch.

“It’s only fair that every single reasonable cost should be covered,” FCC Chairman Ajit Pai said Thursday. “So under my draft rules, the winning bidders in the C-band auction would be required to reimburse satellite operators for their reasonable relocation costs.”

The companies are seeking payment for freeing airwaves U.S. regulators want to reallocate for mobile users. Wall Street had been fretting that a plan unsatisfactory to satellite operators would prompt them to walk out of the negotiations.

A vote is expected at the commission’s Feb. 28 meeting.

“The issuance of the draft order represents a significant milestone in a process that we began in 2017,” Intelsat CEO Steve Spengler said in a statement.“ We look forward to reviewing the draft order.”

The satellite providers agreed to the payments in private talks with the FCC, two people familiar with the matter said.

The C-band airwaves presents an “enormous opportunity,” Pai said. A public auction is the “best approach” and the “best bet to ensure fairness,” he added. The auction is to start Dec. 8.

Intelsat soared the most ever in intraday trading, with a gain of as much as 61% and were up nearly 8% to $4.01 at 12:49 p.m. in New York. Intelsat’s bonds led gains in the high-yield market, with its 9.5% bonds due 2023 rising 22 cents on the dollar to 75 cents. The company’s 8.125% notes due 2023 jumped 15.6 cents on the dollar to 58 cents.

Dianne VanBeber, a spokeswoman for the C-Band Alliance lobbying group that includes Intelsat and fellow satellite provider SES.

Intelsat had hired bankruptcy experts at Kirkland & Ellis LLP to prepare for possible restructuring in the event it wasn’t able to increase the amount the FCC had discussed, one person, who spoke on condition of anonymity because the matter isn’t public, said Wednesday.

At stake is what portion of auction proceeds, projected to reach tens of billions of dollars, should go to satellite providers including Intelsat and SES, both based in Luxembourg, and Eutelsat SA.

The satellite companies have proposed giving up part of the airwaves they use to beam TV and radio programs to stations, and to continue serving customers on airwaves they retain. The swath at issue is known as the C-band, and regulators are eager to free it to carry traffic for fast new 5G networks.

Mobile providers such as Verizon Communications Inc. and T-Mobile US Inc. are expected to bid for the freed frequencies for the 5G networks that will underpin a variety of uses from autonomous vehicles to remote surgery.

FCC Commissioner Jessica Rosenworcel, the commission’s senior Democrat, said in a statement Thursday that she is concerned that Pai is ignoring Congress and “putting the future of 5G service on shaky legal ground.”

“By doing this on its own the FCC is denying the American public what could be extraordinary benefits from the auction of public airwaves,” Rosenworcel said. “Working with Congress we can use the billions of revenues raised in this auction to do the very infrastructure projects this country so desperately needs — from deploying broadband in rural areas to updating 911 systems nationwide to solving the homework gap by expanding internet access to students across the country.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

• 02/05/2020 – Here are the legal precedence for Intelsat; Group of Institutes to urge FCC to act balanced and fast; Comcast aligns with Intelsat and wants it to have “fair” compensation. Pressure is on for FCC.

Winning legal precedence for Intelsat vs FCC: High Court Rebukes FCC in NextWave

In a Jan. 27, 2003, ruling, the U.S. Supreme Court dealt a blow to the Federal Communications Commission (FCC) in its long-running effort to revoke broadcast spectrum licenses from bankrupt NextWave Personal Communications Inc. In an 8-1 decision in the case, Federal Communications Commission v. NextWave Personal Communications Inc.,² the Court held that the FCC could not revoke the licenses even though NextWave failed to pay for them, in light of a Bankruptcy Code provision restricting government agency authority in bankruptcy cases.

Writing for the majority, Justice Scalia rejected all of the FCC’s arguments in favor of revocation and based the Court’s ruling principally upon a “plain reading” of §525 of the Code, which prohibits revocation of licenses based on the licensee’s failure to pay a debt that is dischargeable in bankruptcy.

The ruling may also serve as a reminder to the FCC and other governmental regulators that they may not use their regulatory authority to improve their position as a secured creditor by revoking licenses that are collateral for their secured claim.

Group of institutes to urge FCC to have a balanced act C-band key to U.S. beating China in 5G, groups tell FCC

The dozen groups include the Americans for Tax Reform (ATR), Competitive Enterprise Institute, FreedomWorks, R-Street Institute, Institute for Policy Innovation, American Enterprise Institute, Less Government and others.

They said auctioning the C-band spectrum is the most pressing issue facing the FCC today, and that it should be the commission’s top priority for the February open meeting. Pai last week said he would be circulating a C-band proposal this week with his colleagues on the commission, and that there would be an item on the February 28 meeting agenda.

Comcast C-Band filing with FCC: “CBA must be engaged, incentivized, and compensated to participate in ensuring a smooth transition and unimpaired video operations during and after the transition.” Comcast aligns with Intelsat (200131 – FILED Comcast C-Band – COMBINED)

• 02/05/2020 – If Intelsat files Chapter 11, this might delay the U.S. Federal Communications Commission plan to move forward with an auction of C-band because Intelsat assets would be entangled in court proceedings. Can FCC and mobile carriers wait for implementation of 5G?

Intelsat Weighs Chapter 11 Among Options on C-Band Plan

Shares drop; person close to Intelsat says planned pay too low
FCC readying plan for auctioning satellite provider airwaves

Intelsat SA is considering a possible Chapter 11 bankruptcy filing if U.S. regulators don’t increase the amount of compensation the company would receive for giving up some of its airwaves, a person close to the company said.

Intelsat has hired bankruptcy experts at Kirkland & Ellis LLP to prepare for possible restructuring, said the person who spoke on condition of anonymity because the matter isn’t public.

Intelsat plunged as much as 34% to $2.61 before trading was paused for volatility. Intelsat bonds led high-yield declines, as its 9.5% notes due in February 2023 fell 12.3 cents on the dollar to about 50 cents, yielding about 39%.

The Chapter 11 filing would delay the U.S. Federal Communications Commission plan to move forward with an auction of the so-called C-band airwaves because Intelsat assets would be entangled in court proceedings, the person said.

FCC Chairman Ajit Pai on Thursday is to announce his plans for an auction of C-band airwaves currently used by satellite providers, and a leading issue is how much to pay satellite providers including Intelsat and SES SA. The frequencies would be reallocated to mobile service providers.

There’s been criticism in Congress over the prospect of high payments for the two providers, which are based in Luxembourg, for a sale of U.S. airwaves.

How Race to 5G in U.S. Hit Speed Bump Called C-Band: QuickTake

On Wednesday, Senator John Kennedy, a Louisiana Republican who has sought to limit payments to satellite providers, in a tweet said “American taxpayers own the C-Band.”

“That’s why there’s a bipartisan plan to use auction $ for American priorities — NOT as golden parachutes to foreign satellite companies,” Kennedy said in the tweet.

Earlier New Street Research in a research note said there’s a significant chance the C-Band Alliance backed by Intelsat and SES “walks out of the process” should Pai choose a payment that would return an amount the group can’t accept — anything below $16 billion. Intelsat is carrying debt of more than $14 billion.

The person close the company declined to state the FCC’s latest offer.

Under a proposal another satellite company, Eutelsat SA, filed with the FCC, airwaves auction winners would pay for reimbursing the satellite companies. Payouts would be based on the lost revenue opportunity from the airwaves that are to be sold, rather than calculated as a percentage of revenue from auctioning the airwaves. That would result in about $7 billion to the providers.

The plan Intelsat and SES submitted to the FCC seeks almost half the proceeds of an airwaves auction that could reach $77 billion, to be split among satellite providers.

Markus Payer, a spokesman for the C-Band Alliance, and a representative of Kirkland & Ellis declined to comment. Tina Pelkey, an FCC spokeswoman, declined to comment.

• 02/05/2020 – if Intelsat walks out of negotiation and files BK, who will be worse off? Intelsat and mobile carriers? Is it possible that carriers will compensate Intelsat directly?

Intelsat Seen Walking Out If FCC C-Band Decision Has Low Payout

• 02/04/2020 – Background of Intelsat: where did the $15bil debt come from? LBO. This is negative for Intelsat.

Intelsat tries again to manage US$15bn debt pile

Intelsat has been groaning with debt since its US$16.6bn leveraged buyout in 2008 by private equity firms BC Partners and Silverlake.

• 02/03/2020 – information on Intelsat’s bond

http://cbonds.com/emissions/issue/101691

• 02/03/2020 – Intelsat is trying to turn around its business to avoid being a value trap

Intelsat (I) Tanks in 2019: A Value Stock or a Value Trap?

Despite a dismal stock performance, Intelsat is focusing on five operational priorities which are likely to stabilize its core business, improve competitive position, return it to growth and optimize asset value. Firstly, the company aims to leverage all assets within its global network for maximum return. Intelsat further intends to scale its managed services across enterprise, maritime, business jet commercial and aeronautical government opportunities and build powerful distribution channels to amplify its direct marketing efforts.

Third, the company expects to lead the industry in seamless implementation of satellite-based telecommunications solutions with state-of-the-art infrastructure. Intelsat aims to invest in and develop standards-based terminals and ground hardware, innovative and software-defined technology, and participate in 3GPP and other broad telecom sector standards development.

In addition, it intends to maintain a disciplined stance on cash flow management and enhance productivity of its deployed capital. Last but not the least, the company expects to optimize its spectrum rights to maintain sector leadership and provide regulatory and operational guidance based on market experience.

Intelsat is transforming its business and sector by investing in and deploying state-of-the-art technologies that will change the type of applications it serve and increase its share of global demand for broadband connectivity. It intends to boost revenues by driving stability in its core business, employing a disciplined yield management approach, and emphasizing 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.

With such inherent growth potential, Intelsat is likely to script a turnaround in the near future and benefit investors in the long run.

• 02/02/2020 -It seems like T-mobile agrees to pay FIXED acceleration payment plus acceleration payment prior to the auction. So these two payments are NOT part of auction proceeds. This is aligned with CBA’s proposal. However, devil is in the detail, we really want to know how much are two payments, and this is the key for stock price of Intelsat.

T-Mobile to FCC: you have the power to free up much needed mid-range spectrum

Commissioner Mike O’Rielly has been working on the C-band issue for a number of years and says that he has come up with a proposal that will get the satellite providers to feel more comfortable getting involved with the FCC. O’Rielly has been working with these companies with for years and says that they don’t want to feel as though a proposal is being forced down their throats. Fellow Commissioner Brendan Carr said, “I look forward to reading the details…I think we have a very good shot at a win-win-win for all parties involved here.”

Getting its hands on mid-band spectrum is so important to T-Mobile that the carrier wrote a letter to the FCC (here is the letter T-Mobile – Ex Parte Letter – Legal Authority (As-Filed) 1.29.20). In that letter, T-Mobile’s counsel reminded the regulatory agency that it has the power to demand that the satellite operators currently using the C-band accelerate their relocation to another band. The letter also made it clear that T-Mobile believes that the FCC should exercise this power. And if the satellite operators don’t leave the C-band voluntarily, T-Mobile says that the FCC should force them to go. The letter states, “T-Mobile joins others in urging the Commission to employ its authority under the Communications Act of 1934 (“Act”) to require, as a condition of receiving a license, that winning bidders pay incumbent license holders to voluntarily relocate their current C-band operations on an accelerated basis.”

The C-band Alliance (CBA), which is made up of the satellite companies that will be giving up their spectrum in the auction, says that the payments they receive for giving up their airwaves and relocating should be based on the amount of money that the spectrum is valued at during the auction. T-Mobile disagrees and says that the “moving expenses” and “incentive payments” should be calculated before the auction takes place. The carrier says that these figures could include an estimate of how much the spectrum will bring at auction and the risks that they face for an expedited move.

quotes from the T-mobile letter to FCC: “Under T-Mobile’s proposal, winning bidders’ Relocation Payments would cover incumbent satellite operators’ estimated relocation costs. The Relocation Payments would also include an additional sum to incentivize these operators to accelerate the relocation process. Both the aggregate cost estimate and the aggregate acceleration payment would be fixed prior to the auction. The relocation-cost estimate would be based on satellite operators’ reasonable assessment of their customers’ needs, and the acceleration payment could similarly be based on input from the satellite operators, including the estimated costs of relocation, the value of the relinquished spectrum rights to the operators, and the risks associated with an expedited transition, among other possible factors. These two aggregate sums would then be converted to a per-license Relocation Payment so that auction participants could know their post-auction payment obligations prior to bidding. Winning bidders would then place their Relocation Payments in escrow. Cost-reimbursement funds would be released to incumbent operators upon a demonstration to the Commission that the funds are required for particular identified expenses covered in pre-auction relocation cost estimates. By the same token, acceleration payments would be released upon an incumbent’s certification that it has relocated all customers prior to a specified transition deadline. Finally, once relocation is complete—or at the end of the specified transition period, whether or not all incumbents have voluntarily relocated as required to collect acceleration payments—the Commission would modify the incumbent operators’ licenses to clear the spectrum for use by the auction winners. As this letter explains, T-Mobile’s approach falls well within the Commission’s legal authority and would ensure that incumbents are adequately compensated while facilitating the rapid deployment of innovative 5G services. ”

• 02/02/2020 – great blog and lots of rational thoughts on this subject

Thoughts About The CBA’s New Proposal

Intelsat – Possible Short Squeeze In The Making

another great blog Consistent With A Long Line Of FCC Precedent, The C-Band Carriers Should Receive 100% Of The Proceeds From The Sale Of Their Spectrum Usage Rights

• 02/01/2020 – Next Thursday the FCC will announce their C-Band auction plan:

Speech: FCC Chairman Pai to Announce C-Band Auction Plan for 5G

THURSDAY, FEBRUARY 6, 2020 – 12:00 PM TO 1:00 PMEST

The United States has a real opportunity to lead in the next generation of 5G wireless connectivity, but doing so will require adequate public airwaves be made available to carry all the data. The so-called “C-band”—from 3.7 to 4.2 GHz—is widely seen as an ideal swath of spectrum for the job, as it offers an attractive balance of geographic coverage and capacity for large amounts of data. The global device ecosystem using these frequencies also has real momentum, with 23 countries and counting having allocated them for 5G. But transitioning a portion of the C-band from its current, important use—distributing live television programming to cable systems throughout the nation via satellite—will be no easy feat. The FCC has announced it will auction this spectrum in short order, but key questions remain.

Please join ITIF as we welcome FCC Chairman Ajit Pai to announce the next steps in repurposing a large portion of C-band spectrum to fuel 5G deployment in the United States.

• 02/01/2020 – It is interesting to know that Verizon and other telecoms might be wiling to compensate CBA to expedite the clearing. I think it is possible.

Intelsat +10%; Height expects C-band payout to rise

Intelsat (NYSE:I) is up 10.1% after today’s news on C-band spectrum monetization, ahead of likely February action by the FCC on the matter.

1. Eutelsat (OTCPK:EUTLY) – once in, then out, then in again on the C-Band Alliance led by Intelsat and SES (OTCPK:SGBAF) – has “gone rogue,” Bloomberg notes, proposing a payout for spectrum that’s a fraction of that sought by the alliance. Eutelsat’s lower amount is gaining traction in Washington.
2. On the other hand, after reports that a Senate bill would set up a fund with just $5B allocated for the spectrum companies in total, Height Capital Markets thinks that amount may drift higher.
3. The FCC is signaling a low single-digit payout, Height says, but it believes the agency is just negotiating from a low point as a “trial balloon” and will eventually settle closer to $7B-$9B. A fixed payment faces an “optical issue for policymakers” around the $10B level, it says.
4. And analyst Chase White thinks Verizon and other telecoms would be wiling to compensate C-band holders after the auction to expedite the clearing.

• 01/30/2020 – both Eutelsat and Intelsat want “fair” compensation from the auction, otherwise, they will litigate and drag on the process.

Eutelsat: C-Band Treasury Payment Should Be Limited, Tells FCC it must consider current and future costs of giving up spectrum

Eutelsat execs said that whatever the FCC does–FCC Chairman Ajit Pai has signaled a decision by this fall–it “should provide all satellite industry stakeholders with appropriate compensation and sufficient incentives to facilitate a rapid, consensus-driven transition of this spectrum and minimize the risk of litigation and delay.”

That “litigation” reference is not by accident.

Intelsat: CBA Proposes Mandatory C-Band Clearing Fee, Said that is way to speed FCC auction and double value of spectrum

CBA argues that a “mandatory accelerated clearing fee” can free up spectrum in 18 to 36 months, “significantly faster than the customary FCC 10-year relocation period.” It also says the move would double the value of the spectrum at auction. citing an analysis by The Brattle Group.

“In short, the focus should not be on any potential near-term taxpayer gains, but medium to long-term consumer welfare gains. Free market advocates especially should be sensitive to the idea that licensees have some form of cognizable property interest in their licensees that impose legal constraints on actions by the FCC or other government entities that have the effect of reducing the value of the license.”

• 01/30/2020 – I need to watch out for the Feb 28th meeting. And should  I play one month or two months LEAPs call on this?

Pai: C-Band Item Will Be on February Meeting Agenda

FCC chair Ajit Pai said he will be circulating a C-Band item next week for a vote at the February meeting.

The FCC is proposing to auction 280 MHz out of the 500 MHz total in a band currently used for, among other things, satellite delivery of programming networks to broadcasters and cable operators, and for some remote-to-studio transmissions.

According to FCC website, February 2020 Open Commission Meeting
10:30 am – 12:30 pm EST, Room TW-C305, 445 12th Street S.W., Washington, DC

Topics selected for FCC open meeting agendas will be posted on the Commission’s website approximately three weeks prior to the Commission’s next monthly meeting. The Commission will also issue a public notice of the “Commission Meeting Agenda” one week before the meeting and announce at that time the items that are scheduled for the agenda.

The item is the latest in a series of FCC efforts to free up spectrum for next-gen wireless.

Related: CBA Says C-Band’s 280 MHz Could Be Worth $77 Billion 

That news came in a press conference following its Jan. 30 public meeting. He would not comment on reports the FCC would offer satellite operators a “single-digit” billion incentive payment for clearing off the spectrum ASAP.

Related: CBA Proposes Mandatory C-Band Clearing Fee 

The C-Band Alliance has signaled it wants a share of the auction revenues, and was less than happy with a new bill this week that would also include such an incentive payment, but capped at $1 billion.

• 01/30/2020 – In order to compete with Chinese, time is CRITICAL for FCC to deploy the 5G, it seems like Intesat can leverage on this.

Keep 5G Safe From Chinese Domination
The FCC has a draft plan that would cut through bureaucratic obstacles to allocating new spectrum.

The greatest technical obstacle is the lack of available frequency spectrum for U.S. wireless carriers to deploy. If the U.S. remains on its current spectrum-allocation timeline, it won’t have 5G soon enough to protect American interests. Even when suitable spectrum is identified, it must be cleared and auctioned for use, and towers and other hardware must be put in place over many years. Time is critical.

FCC Approves $20 Billion Rural Broadband Expansion Fund  – FCC also needs money from spectrum auction

• 01/30/2020 – Intelsat and share bonds fall significantly today

Intelsat Bonds Fall on Fears Over FCC Auction Plan Some bonds hit record lows below 50 cents on the dollar

Satellite operator Intelsat SA’s I -17.72% bonds hit record lows Thursday as fears grew that the company will receive far less than expected when the Federal Communications Commission auctions off the C-band spectrum the company uses for its video and radio services.

Intelsat bonds were the most actively traded corporate debt securities in the U.S. Thursday morning with about $830 million face amount changing hands, accounting for roughly 6% of all trading, according to data from MarketAxess. The firm’s 9.5% bond due 2023 fell to a record low of 43 cents on the dollar, down from 56 cents Wednesday and 71 cents last week.

Selling started early this week, then accelerated Wednesday when Reuters reported that the FCC plans to make a relatively modest incentive payment to Intelsat and other satellite companies that use the spectrum, like SES SA. Speculation spread that the companies would receive about $5 billion rather than a prorated share of auction proceeds, prompting bondholders to bail out, the analysts said.

“We’ve tried to establish for the record that the actual value of the spectrum is between $43 billion and $77 billion,” said Dianne VanBeber, vice president for investor relations at Intelsat. “We have a fiduciary duty to our stakeholders and can’t surrender the value of our rights for less than the market value.”

A spokesman for the FCC declined to comment

• 01/30/2020 – It depends on how much incentives they will give. C-Band Alliance is supposed to have strong hand to negotiate with FCC and US government. A spokesman for the C-Band Alliance said low-single-digit-billion incentive payments “is not going to do it.” It seems like Eutelsat SA (which is way smaller than Intelsat) alone asks for $7 bil. The possible timeline is ” The FCC is expected to move forward on the auction at its February meeting and decide next week whether it will endorse incentive payments, the person said. The FCC plans to finalize auction procedures in the coming months as it aims to launch the auction by year end.” – so we will wait and see.

FCC to move forward on C-Band auction, may back incentives to shift spectrum: source

WASHINGTON (Reuters) – The Federal Communications Commission plans to move ahead in February with a planned public auction to free up spectrum in the key C-band and could endorse “low single-digit billion-dollar” incentive payments to shift existing satellite users, a person familiar with the matter said.

The C-band is a block of spectrum used by satellite company customers to deliver video and radio programming to 120 million U.S. households. It is seen as the most likely short-term source of available spectrum for next-generation 5G use.

FCC officials briefed congressional staff last week that the commission believes it could cost about $4 billion to $5 billion to relocate satellite firms and is considering proposing “low-single-digit billions” in incentive payments to speed the transition.

The FCC does not think it needs new congressional legislation to move forward, the person said, and is considering funding the payments with a surcharge paid by winners of the spectrum action.

The FCC declined to comment.

Experts believe the C-band spectrum can be divided to maintain existing service and deliver 5G service. FCC Chairman Ajit Pai said in November he supported a public auction of 280 megahertz of the C-band.

The FCC is expected to move forward on the auction at its February meeting and decide next week whether it will endorse incentive payments, the person said.

The FCC plans to finalize auction procedures in the coming months as it aims to launch the auction by year end.

Major satellite service providers including Intelsat SA (I.N), Telesat and SES SA, which form the “C-Band Alliance,” said last week they were seeking “fair compensation” to quickly clear the spectrum. They argue that without their cooperation, “this critical 5G spectrum will not be made available for at least 10 years.”

They previously proposed selling the spectrum privately to wireless carriers, arguing a private sale would make the spectrum available faster for 5G. A spokesman for the C-Band Alliance said low-single-digit-billion incentive payments “is not going to do it.”

Another satellite company, Eutelsat SA (ETL.PA), in a letter last Thursday to the FCC, proposed up to $7 billion in transition funds to “quickly” make spectrum available for 5G, including $4.5 billion in relocation costs.

Democratic U.S. Senator Maria Cantwell said in December a Republican bill approved by the Commerce Committee to set C-Band auction rules could give the satellite companies a “windfall of up to $20-30 billion of the spectrum auction proceeds.”

A bill sponsored by Cantwell would limit payments to providers for costs they incur in relocating at up to $5 billion.

• 01/29/2020 – Intelsat downed 30% by the Senate bill today. I think the company does have significant leverage to fight with US government and FCC by intentionally slowing down the process of clearing the spectrum or litigating through international court. The final result might be a settlement. The middle ground is $30B. the company might get $15B ~20B through a number of years.

Quote from CEO of “we simply do not have the flexibility to proceed unless we are offered the opportunity to share fairly and appropriately in the value being created through our tremendous past and future efforts. We continue to believe such sharing is most easily expressed through a formula directly tied to the actual realized proceeds of any C-band auction.”

1. Intelsat is lower after a bipartisan Senate bill proposes limiting the payout to companies looking to monetize C-band spectrum.
2. The bill would set up a $6B fund to pay expenses and incentives to vacate the bands.
3. But the C-Band Alliance (led by Intelsat and including SES (OTCPK:SGBAF)) has said the airwaves could be worth up to $77B and calls for spectrum holders to receive “fair value.”

here is the detailed news: Senators introduce C-band legislation to prevent windfall for satellite companies. here is the details of the bill (C-Band-Auction.pdf). Here is Senator Kennedy’s press release.

A bipartisan effort by senators is designed to ensure foreign-owned satellite companies don’t end up making a windfall for giving up U.S. C-band spectrum for 5G.

Senators John Kennedy (R-Louisiana), Brian Schatz (D-Hawaii) and Maria Cantwell (D-Washington) introduced the Spectrum Management and Reallocation for Taxpayers (SMART) Act, which would ensure proceeds from the public auction of C-band spectrum benefit taxpayers.

The SMART Act gives the Federal Communications Commission (FCC) authority to conduct a public auction of C-band spectrum, and uses nearly all proceeds from the auction to bridge the digital divide, enable next-generation public safety services and reduce the national debt.

The C-band is probably the best near-term prospect for getting more mid-band spectrum to market for 5G terrestrial use in the U.S., but it’s been a long time coming. The 3.5 GHz auction will begin in June, but that’s considered more encumbered than the C-band, where satellite operators are willing to vacate on the order of 300 megahertz of the 500-megahertz band, but for a price. So far, that price has been the source of great debate.

The C-Band Alliance (CBA), which is comprised of the satellite operators Intelsat and SES that use the bulk of the C-band spectrum in the U.S., submitted a filing (PDF) to the FCC on Monday that cited two economic firms estimating the value of the 280 MHz of C-band spectrum at $43 billion to $77 billion. The CBA operators use the spectrum to serve companies that deliver TV broadcasts and other content to 120 million households; the spectrum was allocated decades ago and the rights are renewed every 15 years with an expectation of renewal in perpetuity, according to the filing.

“Based on this licensing scheme and over the last 40 years, the CBA companies built their businesses and made long-term contractual commitments to the content companies using their services,” the CBA stated. “In so doing, the CBA member companies have invested more than $50 billion in designing, manufacturing and launching more than 230 U.S.-made satellites and generating tens of thousands of high-paying jobs.”

RELATED: C-Band Alliance taken to task in FCC oversight hearing

The legislation introduced yesterday would allocate up to $5 billion to reimburse the satellite companies for relocating and provide no more than $1 billion of auction revenue for incentive payments to them. A portion of the proceeds would be directed for rural broadband deployment, next-generation 911 networks and cutting the national deficit.

“The real winners here are the American taxpayers who not only own the C-Band, but stand to reap the benefits of 5G. Rather than bailing out foreign satellite companies, money from the auction of this spectrum should go to American priorities,” Kennedy said in a press release. “This bill gives us the chance to pay down the national debt, improve public safety and get broadband to rural communities that are still handcuffed to dial-up internet.”

The CBA has fought for its members be reimbursed through a formula tied directly to the actual proceeds from a C-band auction.

“At the C-Band Alliance, we understand that the goal is to get C-band spectrum cleared quickly and into the hands of the wireless operators. Achieving that objective will unlock hundreds of billions of dollars in U.S. economic development and bring to the U.S. the benefits of leading the next wave of global tech innovation,” the CBA said in a statement Tuesday.

“But clearing the spectrum, while protecting our customers—America’s programmers—is a difficult and painstaking process, requiring the launch of new satellites and the relocating of nearly 100 networks into the smaller spectrum footprint. Senator Kennedy has suggested the spectrum could be worth $60 billion,” the CBA said. “A proposal of 1/60 of that sum in exchange for the enormous efforts required to clear the spectrum—and making it available to the wireless community a decade before it would otherwise be available—-lacks merit and is completely inconsistent with the FCC’s emerging technologies standard. As public companies, we are simply unable to agree to a fundamental modification of our rights, rights in which we have invested $50 billion over 40 years, without being treated fairly.”

The Open Technology Institute and Public Knowledge have argued (PDF) that the FCC has no legal authority to require or specify any incentive or “acceleration” payments to C-band incumbents that extend beyond actual and reasonable relocation costs.

Michael Calabrese, director of the Wireless Future Program, Open Technology Institute at New America, said in a statement that the bipartisan Senate bill introduced on Tuesday is needed to ensure the FCC is “not held hostage to the demands of foreign satellite companies seeking an unjustified windfall at taxpayer expense.”

The American public owns the airwaves, and “this bill mandates an early auction and provides a generous incentive payment to satellite incumbents, but it also redirects $15 billion or more in auction revenue to fund major investments in rural broadband, digital inclusion programs and to modernize public safety infrastructure,” he added.

• 01/08/2020 -watch out the Next FCC meeting on January 30th

Congress missed an opportunity at end of 2019 to pass #Cband legislation. Job falls to

• 12/31/2019 – The measure from congress on Intelsat is stalled, all eyes are on FCC

Intelsat Spectrum Payout Stalls in Congress, Pushing It to FCC
By Todd Shields and Rebecca Kern
December 18, 2019, 12:36 PM PST
Lawmakers miss chance to resolve dispute over auction proceeds
Intelsat, SES want payment for giving up frequencies for 5G

• 12/28/2019 – short squeeze for I – today is 31.15%

Intelsat – Possible Short Squeeze In The Making

• 12/30/2019 – very detailed great argument of bull thesis, Intelsat: Time To Buy (From A Long Time Bear)

1. FCC run auction is good news. Still, multiple ways for the proceeds to go to satellite companies.
2. FCC has no legitimate way to strip satellite companies of their non-interference rights.
3. None of the congressional bills will make it into law.
4. FCC will deliver fair compromise outcome for all parties involved.
5. Intelsat difficult to value, but $18 average analyst PT is the midpoint of my fair value range and seems reasonable.

• 11/23/2019 – valuation of I is about $2 ~$12

Intelsat Stock Lost 70% of Its Value—and There Could Be More Pain Ahead

Intelsat has had a bad month. Things could get worse from here.

The satellite company’s stock, which closed at $7.11 on Friday, has lost 70% of its value in the past two weeks. Intelsat (ticker: I) now has a market cap of around $1 billion and has $14.7 billion of outstanding debt. Yet Wall Street may still be too optimistic about how much the company could collect from a government sale of 5G spectrum.

• 11/18/2019 – bad news dropped Intelsat 40% in one day, maybe overacted since all these are not final yet

Satellite stock Intelsat drops 40% after FCC 5G decision

1. FCC Chairman Ajit Pai said in a tweet that his agency “must free up significant spectrum” for 5G telecommunications.
2. The FCC said it expects to begin a public auction of C-band to happen before the end of 2020, a blow to satellite operators using the valuable spectrum.
3. “The private auction would generate billions in proceeds for Intelsat and the other C-band operators,” analyst Chris Quilty told CNBC.

• 11/18/2019 – the news on WSJ dropped I by 40% today

FCC Backs Public Auction of 5G Airwaves
Satellite companies that use spectrum have objected to a public auction; FCC Chairman Ajit Pai says it could benefit taxpayers