In accordance with the FCC mandate, Intelsat S.A. has filed a comprehensive two-year transition plan to migrate to a higher spectrum band, as it makes the C-band available to telecom carriers through public auctioning for nationwide 5G deployment. The detailed and proactive steps highlight the focused attempts of the company to continue providing unhindered services to more than 100 million households during the transition phase.
In particular, Intelsat will shift more than 80 broadcast, cable, radio and government customers to the 4.0 to 4.2 GHz spectrum of the C-band, with corresponding changes at 3,500 cable head-ends and 13,500 affiliate earth stations. The company will install about 60,000 5G signal-blocking filters across the country to mitigate post-transition interference and ensure a high-quality service without any compromise. Moreover, Intelsat will aim to consolidate multiple telemetry, tracking and control (TT&C)/Gateway antennas in two locations on the East and West Coasts in order to execute a seamless transition process.
Last week, Intelsat inked an agreement with Maxar Technologies Inc. (MAXR - Free Report) to develop and deliver four satellites and another with Northrop Grumman Corporation (NOC - Free Report) for the manufacture and delivery of two new satellites for the transition. The company is also reportedly planning to secure an additional satellite from another supplier in order to meet the stipulated FCC guidelines for C-band spectrum auction and reconfigure its terrestrial-based infrastructure for a successful transition.
Notably, Intelsat has reportedly filed for bankruptcy protection in order to raise cash and prepare the spectrum for public auctioning as it remains weighed down by the huge debt burden. The company expects to emerge stronger from this financial restructuring process, with greater fiscal viability to continue launching new satellites, building a comprehensive ground network and adding innovative services to its portfolio.
In concurrence with the bankruptcy filing, Intelsat has earmarked $1 billion in debtor-in-possession financing to sustain operations during the proceedings and make necessary investments to prop up the spectrum for the auction. The company is likely to incur about $1.6-$1.7 billion as expenses for infrastructure upgrades for migration to a higher band spectrum. Intelsat expects to receive these upfront costs as reimbursements along with $4.87 billion in incentive payment for meeting the FCC’s deadlines of clearing 120 MHz of spectrum (3.7 to 3.82 GHz) by Dec 5, 2021, and the remaining 180 MHz (3.82 to 4.0 GHz) by Dec 5, 2023.
Moving forward, the company 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, which competes with Iridium Communications Inc. (IRDM - Free Report) , 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 the development of 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 presently has a Zacks Rank #4 (Sell).
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