Insiders at global satellite services provider Intelsat have told the UK’s Financial Times that it will shed assets to pay down its colossal $14.76 billion of debt. Over the past week its share price has plummeted from $9.83 to $7.60, down 54% from the start of this year.
Intelsat’s debt dwarfs that of others in the industry, SES holds around $4.44 billion, Telesat $2.75 billion, and Eutelsat has a comparatively tiny debt of $55.35 million. Private equity firms BC Partners and Silver Lake acquired Intelsat in 2007 for $16.5 billion, when the company was already burdened with more than $11 billion debt, and it looks like business has not gone as well as they would like, hence the assets sell-off.
The market capitalization for Intelsat now stands at about $815 million, which is not far below its net worth (assets minus liabilities) whereas the far better balanced SES and Eutelsat, have market capitalizations of $11 billion and $6.2 billion, which show how bad things have got at the satellite player.
The auction could feature assets such as its fleet of ‘Galaxy’ satellites and its Intelsat Americas media and cable distribution business, which works with customers such as HBO. Its ‘government solutions’ business, which supplies bandwidth to the US armed forces around the world, could also be sold off. Its military business alone is a valuable one, comprising 16% of its $598 million revenue in the last quarter, while network services accounted for 45%, and media 37%, as of the end of Q2 2015.
French satellite operator Eutelsat and John Malone’s Liberty Media, who tried to acquire Intelsat in 2007 in a joint bid with EchoStar, are believed to be eyeing up the opportunities., Luxembourg rivals SES would also be interested, as would a number of private equity firms. The report warns that talks are still in the preliminary stages and that Intelsat may decide not to sell anything at all.
Only this month, Intelsat partnered with US encoder specialist Harmonic to launch HVN Intelsat UHD, a linear UHD demonstration channel for the North American TV markets. This will be broadcast via Intelsat’s (for now) Galaxy 13 satellite in the US allowing MVPDs to test UHD delivery. The Galaxy 13 satellite carries 76 HD channels and reaches 98% of US headends.
Its satellite fleet is currently at more than 50 satellites, covering 99% of the Earth’s populated regions, and also has its IntelsatOne terrestrial fiber network and a collection of teleports, combining to form a singular global infrastructure which provides diverse and wide-spread communications.