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Intelsat Seeks Bankruptcy Protection Fund for Sustainability
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Intelsat S.A. is reportedly seeking the cushion of a bankruptcy loan to sustain operations as its shares continue a steady downtrend. The company expects that Chapter 11 bankruptcy protection funding will enable it to tide over the storm until billions of dollars are made available through public auctioning of its C-band spectrum later this year.
Intelsat’s shares declined sharply in November 2019 when investors resorted to panic selling as the Federal Communications Commission (“FCC”) lent its support to the Congress’ move to hold a public auction for its C-band spectrum. The stock declined 67.1% in 2019, making it the worst performer in the Zacks Satellite and Communication industry.
Notably, Intelsat along with some other satellite providers had decided to sell some of the airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of the spectrum, widely known as the C-band, in a private auction to raise cash and repay its huge debt burden. The airwaves acquired over the years were mostly used by these firms to deliver videos to TV stations and considered surplus resources. Moreover, the coveted spectrum was much in demand by telecom carriers for the deployment of 5G and offered a huge opportunity to rake in large sums of money.
However, several U.S. senators introduced a bill titled the ‘5G Spectrum Act’ that mandated the public auctioning of the C-band to start no later than 2020-end, and sharing at least half of the proceeds with the FCC. With the FCC Chairman Ajit Pai publicly supporting this view, shares went on a tailspin as companies like Intelsat were set to lose a significant chunk of legitimate money.
The company is currently seeking a loan of about $750 million to facilitate necessary improvements in its spectrum band ahead of the public auction. In addition, the funding will enable it to address the huge debt burden of $14 billion. The company is also exploring other options to improve its liquidity, including a likely swap of debt for equity.
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 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, the company 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 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 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 serves and increase global demand for broadband connectivity. It intends to boost revenues by driving stability in the 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.
ORBCOMM delivered a positive earnings surprise of 5.8%, on average, in the trailing four quarters.
T-Mobile has a long-term earnings growth expectation of 17.7%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 19.5%.
Iridium delivered a positive earnings surprise of 14.1%, on average, in the trailing four quarters.
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Intelsat Seeks Bankruptcy Protection Fund for Sustainability
Intelsat S.A. is reportedly seeking the cushion of a bankruptcy loan to sustain operations as its shares continue a steady downtrend. The company expects that Chapter 11 bankruptcy protection funding will enable it to tide over the storm until billions of dollars are made available through public auctioning of its C-band spectrum later this year.
Intelsat’s shares declined sharply in November 2019 when investors resorted to panic selling as the Federal Communications Commission (“FCC”) lent its support to the Congress’ move to hold a public auction for its C-band spectrum. The stock declined 67.1% in 2019, making it the worst performer in the Zacks Satellite and Communication industry.
Notably, Intelsat along with some other satellite providers had decided to sell some of the airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of the spectrum, widely known as the C-band, in a private auction to raise cash and repay its huge debt burden. The airwaves acquired over the years were mostly used by these firms to deliver videos to TV stations and considered surplus resources. Moreover, the coveted spectrum was much in demand by telecom carriers for the deployment of 5G and offered a huge opportunity to rake in large sums of money.
However, several U.S. senators introduced a bill titled the ‘5G Spectrum Act’ that mandated the public auctioning of the C-band to start no later than 2020-end, and sharing at least half of the proceeds with the FCC. With the FCC Chairman Ajit Pai publicly supporting this view, shares went on a tailspin as companies like Intelsat were set to lose a significant chunk of legitimate money.
The company is currently seeking a loan of about $750 million to facilitate necessary improvements in its spectrum band ahead of the public auction. In addition, the funding will enable it to address the huge debt burden of $14 billion. The company is also exploring other options to improve its liquidity, including a likely swap of debt for equity.
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 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, the company 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 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 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 serves and increase global demand for broadband connectivity. It intends to boost revenues by driving stability in the 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.
Intelsat presently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry include ORBCOMM Inc. , T-Mobile US, Inc. (TMUS - Free Report) and Iridium Communications Inc. (IRDM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ORBCOMM delivered a positive earnings surprise of 5.8%, on average, in the trailing four quarters.
T-Mobile has a long-term earnings growth expectation of 17.7%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 19.5%.
Iridium delivered a positive earnings surprise of 14.1%, on average, in the trailing four quarters.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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