7.80 -0.23 (-2.86%)
After hours: 5:25PM EST
|Bid||7.77 x 1000|
|Ask||7.99 x 2900|
|Day's range||6.71 - 14.03|
|52-week range||6.71 - 29.54|
|Beta (3Y monthly)||1.50|
|PE ratio (TTM)||N/A|
|Earnings date||18 Feb 2020 - 24 Feb 2020|
|Forward dividend & yield||N/A (N/A)|
|1y target est||30.56|
(Bloomberg) -- The Federal Communications Commission moved Monday toward controlling a lucrative airwaves sale in a public auction rather than letting Intelsat SA and SES SA conduct a private sale of the frequencies as they had proposed.The FCC’s plan, which could slash the satellite companies’ take by billions of dollars, was announced in a tweet by FCC Chairman Ajit Pai, who, according to agency officials, had earlier discussed the matter with President Donald Trump. The FCC could vote to adopt the plan early next year.Pai said the sale should free airwaves for 5G wireless use, do so quickly and generate revenue for the U.S. government. He didn’t say if any proceeds would be earmarked for the companies.“I’ve concluded that the best way to advance these principles is through a public auction,” Pai said in a tweet.The satellite companies signaled resistance, saying in a statement they would work toward an alternative and calling Pai’s plan “a significant departure” that “does not address the critical involvement of the incumbent satellite operators” in reconfiguring airwaves uses.“Intelsat is significantly over-levered, they need a major spectrum windfall to right-size their balance sheet and end up with a capital structure that’s tenable,” said Stephen Flynn, a telecom analyst at Bloomberg Intelligence. “The more uncertainty and the longer it takes, it adds more risk.”Intelsat lost the most since it became a public company in 2013 and reached its lowest price since April 2013, according to Bloomberg data. Shares plunged 40% to $8.03 in trading of 55 million shares, 14 times the three-month daily average.Intelsat and SES -- both based in Luxembourg -- want to sell some of the airwaves they now use to send shows to TV stations across the U.S. Wireless providers gearing up for fast 5G networks are seeking additional capacity and might buy them. The satellite companies plan to retain enough airwaves to continue servicing TV stations.The satellite providers’ plan provoked opposition among lawmakers who expressed concern about European companies profiting from the sale of U.S. airwaves, including Senator John Kennedy, a Louisiana Republican who said he called Trump to raise an alarm. Trump called Pai on Oct. 30 and while the issue was discussed, the president didn’t direct the agency on what to do, said an FCC official who spoke on condition of anonymity.Kennedy told reporters that Pai was “putting both the American taxpayer and our 5G effort first” with Monday’s announcement.The senator said there “are some swamp creatures in the government who were trying to help some of their telecommunications buddies put all four feet and their snout into the trough -- and the FCC today said, ‘Nope, we’re going to do this right.’”Also Monday, leading Republicans introduced legislation requiring a C-band sale to begin by the end of next year, with taxpayers getting at least 50% of the airwaves’ market value.“This legislation would get crucial mid-band spectrum into the market to benefit the American people and secure our position as the leaders in the race to 5G,” Senator Roger Wicker, chairman of the Senate Commerce Committee, said in an emailed news release.Kennedy, who spoke in a telephone call, said he opposes the Wicker bill and wants taxpayers to harvest a higher percentage. He didn’t offer a figure.FCC officials declined to discuss what portion of sales the satellite companies might get under a public auction. They said the agency intends to begin the sale in 2020.JPMorgan in a note said it appears “the private auction process is officially dead, but there is still no consensus of how to get to a public auction.”Intelsat wants to use proceeds to reduce some of its $14 billion debt load, otherwise its leverage could rise to a potentially unbearable level by the end of this year, according to Bloomberg Intelligence.An array of Intelsat notes sank on the news, with some 2025 maturities hitting their lowest level in more than a year and a 2024 bond setting an all-time low.Intelsat bonds led high-yield declines Monday, with its 8.125% notes maturing June 2023 dropping 9.25 cents on the dollar to 60.25 cents. The debt yields about 26%. Its 9.5% notes due February 2023 fell 8.1 cents on the dollar to 73.4 cents.”On Nov. 15, the C-Band Alliance group made up of Intelsat, SES and Ottawa-based Telesat offered to voluntarily pay the U.S. Treasury 30% to 75% of the billions of dollars they could reap if they’re allowed to sell airwaves in a private auction.The airwaves in question are in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum, known as the C-band. Intelsat and SES dominate that patch of airwaves, which are considered well-suited for 5G networks.Proponents say the frequencies are needed to help the U.S. beat China in a so-called race to 5G. The alliance that includes Intelsat and SES said its proposal would be quicker than an FCC-run auction.The C-Band Alliance in its statement Monday said that “the full cooperation of the satellite operators will be required to ensure the successful clearing of the C-band while protecting the incumbent broadcast services enjoyed by millions of U.S. households.”(Updates with closing price in seventh paragraph, comment from Senator Kennedy in 10th)\--With assistance from Susan Decker.To contact the reporters on this story: Todd Shields in Washington at email@example.com;Allison McNeely in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jon Morgan at email@example.com, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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