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Welcome to the board. Thoughtful conversation is definitely a plus on the board, so I know most of us will appreciate real tough questions so that we can discuss the reality of our investments here.
If you will notice the recent price action between 2018 and today in Feb. 2020 , it was all caused by speculation that a private auction could potentially have a windfall payment of around 20 billion going directly to Intelsat. Which would make them debt free and an added 6 Billion cash in hand. Obvious by now, this is not what is happening.
A price high of over $37 was had during this time. 10x of our current position. Some fuzzy logic might say that since Intelsat is going to receive around 5 Billion of a windfall (Plus new equipment, 3 or so American Made Satellites) that we should be able to reach a high of around 25% of the price when the windfall was 20 Billion. Which is a high price of around $9.25 , but we know that this is not how the markets work.
All this to say that regarding financial fundamentals, there isn't much to wonder about. Intelsat is in a strained industry, making less income than ever, has a whole lot of debt, the worst of which is rated at basically an F by Moody's. However, enter an upwards of 5 billion dollar (maybe 10? big difference) windfall, some free new equipment, some free advertising through the 5G shuffle, and if you check their website, some new (exciting?) services that could set them apart. What do you have?
At bottom line, a stock that is worth more than $3.75? Proba-possibly.
Two interesting things. Their weakest bonds that are being traded now, the C- ones, getting paid off through the windfall? At a discount? Already repurchased with other debt? Hmm.
Also, One Billion shares for sale? Yes, please. Regarding current buyers at $3 - $8 this is great news. Will the company not attempt to maximize price for what is essentially IPO 2.0 ? Let's say they want to sell those 1 Billion shares for between $10 and the recent high of $37, that is a big cash infusion, 20 billion? So now you take a price that is whipped between $10 and $37? ($10 to $100-200?) The dilution will mean that the current 140 million shares is about 12.5% of the eventual 1B1.4M . If we can assume that the similar windfall of 20 billion dollars can be had through dilution, then I will take the price of $20 and 12.5% of that is, $2.50 per share. However, that is strictly a financials based number. If we can garner some excitement by pushing the recent, 'We have NASA sensors on our satellite'. 'Boeing makes our stuff'. Then what we have is a debt free company with lots of shares in issue, with a somewhat new fleet, still with a larger footprint than most other providers. Call it $15 when the dust settles.
I could be wrong, but it seems that a back door exists here where the CBand Alliance can actually lobby and court the prospective bidders to see how much they are actually willing pay for expediting service.
'Give us your best offer guys so that we don't have to go bankrupt and tie our assets to courtrooms for the next five years and completely destroy the chances of having 5g anytime soon, not to mention the profitability of selling your brick sized new phones that can accept the signal...."
Yes, these companies are foreign. Which is all the more reason to give them what they want so they quietly leave the space. They don't have a heart for the USA, so the chances that they make a business decision here and not a decision for America are quite high. It's not like they are McDonalds and will lose the hearts and minds of the American people if they don't play ball and sit quietly.
Thanks.
Page 88. Section 217.
" Although some incumbent space station operators have argued for significantly more, we find $9.7 billion is a substantial margin lower than the total amount we estimate that overlay licensees themselves would be willing to spend to clear this spectrum early. This helps ensure that we do not impose an obligation on overlay licensees that we are not comfortable they would have assumed on their own, in the typical Emerging Technologies scenario in which voluntary acceleration payments would be feasible."
This leaves massive room for the new licensees (i.e. Verizon, AT&T, etc.) to actually OFFER more compensation above and beyond if the C-Band alliance decides that they need a higher offer. This shows that the FCC sees this 9.7B number as a minimum and 'safe offer'.
Question. Could Intelsat have done a cash repurchase of their bonds when the shorts were beating down the price?
Didn't the bonds hit a low of like .37 cents, I mean they very well could have bought out their own debt, not?
And if so, at what point do they need to announce that?
I mean, would it be all that hard to convince a creditor to make a new loan when there was guaranteed payment coming to you from government?
Would be an interesting announcement.
Another thought, 4.8 billion divided by 140m shares is $34.28 per share. Then add a free fleet of new satellites. There just seems to be a lot of upside here.
These guys are calling for sells through a white paper and then buying through a proxy.
Four words. TOO BIG TO FAIL. https://en.wikipedia.org/wiki/List_of_Intelsat_satellites
Can't just go up in a wisp..
What a sham.
1. Take one look at their bond ratings and income vs expenses. DUH they will go bankrupt without a high spectrum payout. Anyone that did DD knows this.
2. Shame on bloomberg for tree shaking with their platform. If only the SEC was funded the way it should be..... God have mercy on inside traders and tree shakers.
We just need to keep it fair, saying we hope for something is one thing, but making a statement of fact needs to be backed up with something, otherwise it's just a pump move.
Otherwise, yeah things are great here, could have gone for a better buy price but averaged down somewhat. My calls seem to be catching back up.
You are stating here that 29 million shares which are sold short presently are being re-purchased to cover from today until Friday?
Can you cite your source for this information?
1/10th priced soup getting stirred some more. https://ecfsapi.fcc.gov/file/101311023323180/SSO%20Ex%20Parte%20(1-31-20).pdf
This is a must read...get the 30 day free trial.
https://communicationsdaily.com/article/view?search_id=354124&id=594357&stack=stack_5e3373e5cc8b6
These guys give a free 30 day trial for anyone that is interested. The horse trading here is almost funny...but when I look at how low shares are, I cannot help but think about all the stop losses that were just hosed and all the Washington insiders that have their hands on shares by now.
https://communicationsdaily.com/article/view?search_id=353747&id=594259&stack=stack_5e32249187e1a
The satellite providers have everybody cornered. Do you want 5G now or 5 years of litigation? The CBA's argument that 5G is more valuable now than later stands true for the same reason that they are asking for only a 'fair portion' of auction proceeds. Because cash now to them is worth more than litigation for five years and maybe more cash later.
That article from HatTrick was priceless because it goes to show that the 'incentive payment' to Intelsat is probably going to reach at the very least 3 billion dollars, which cuts their debt better than 25% and makes their business way more flexible.
Don't forget what Intelsat started as...https://en.wikipedia.org/wiki/Intelsat there is a long history for this business and the investments over the past 50+ years have been instrumental in making SatCom what it is today. Some incentive is justified...
Besides, it's international law that Intelsat be in control of certain bandwidth, I can't quite remember where in my DD that came up, but the threats of sunsetting licenses and moving ahead without them is really just a mountain of cotton candy.
Required Reading https://c-bandalliance.com/wp-content/uploads/2020/01/CBA-Indicates-Value-of-5G-C-Band-And-Quantifies-Cost-of-Clearing_130pm.pdf
Follow @cbandalliance on Twitter for their latest news
Consultant to the CBA on Twitter just now..
Preston Padden
@BoulderPreston
·
1h
Speaking just for myself, not for CBA, under the Kennedy Bill the sat cos will not make expensive effort to shrink their service by 60% and either (1) 120 million American TV HH’s will lose their TV or (2) the U.S. will fall behind the rest of the world in 5G. Brilliant!
.GOV - "Hey, you better get off of your rightful licensed property and here is a random round number, one billion for all of you, and here is another random round number for all of the expenses that you will incur"
CBandAlliance - "No"
Then what? No 5G?
It would be prudent to not forget, these Sat operators are minding their own business in their own lane doing what they are supposed to do and in our Capitalist paradigm, you can't just shove somebody out of their lane and flush their potential profitability down the toilet when they have rights written in black and white.
From the 'Fact Sheet' - Now you can't tell me that some non-itemized 'bill' set forth by people that only know numbers and not costs of doing business as a Satellite operator is going to fly when you look into the following excerpt from...https://c-bandalliance.com/wp-content/uploads/2020/01/CBA-Clearing-Speed-Fact-Sheet_1-14-20-1.pdf
The CBA Must Be Incentivized toRapidlyClear Spectrum for5GClearing 280 MHz of C-band spectrum and transitioning it from Fixed Satellite Service (“FSS”) to 5G is a tremendous undertaking involving significant costs in terms of capital expenditures, time and effort, opportunity costs and business risks. Society as a whole will benefit from more mid-band spectrum for 5G. However, the costs involved in effectuating the clearing of the C-band (while maintaining existing FSS used to transmit TV and radio content to nearly 120 million American households) are uniquely borne by the members of the CBA. For example, reducing the amount of spectrum available for existing, contracted-for services requires Intelsat and SES to:
•Make multi-billion-dollar investments to manufacture and launch eight new satellites and accelerate procurement of a ninth satellite to ensure enough on-orbit capacity exists for current customers to continue distributing content or operating their networks within the context of existing contracts;
•Ask more than 60% of their customers tomove from their existing transponder(s) to a new one, either on the same satellite or a different one. Each move must then be supported at all relevant receive ground stations, impacting anywhere from a handful to thousands of antennas;
•Develop a highly orchestrated plan to execute a sequence of migrations in a manner that utilizes limited free satellite capacity efficiently while supporting contractual migration notifications among customers;
•Provide dual illumination capacity free of charge to customers to support these moves, including to allow for equipment migrations;
•Procure, make available, and potentially deploy the interference mitigation solution developed by the CBA member companies, including a specific radio frequency filter configuration with a 20 MHz guard band on approximately 35,000 antennas in the continental United States (“CONUS”);
•Engage, contract with, and potentially deploy hundreds of technicians throughout CONUS to gather site and antenna information from approximately 13,500 receive sites registered with the FCC and to schedule site visits to perform installation services or ship equipment to the earth station operators;•In some cases, moving a customer to a different satellite will require the satellite operators to provide and install or pay for installation of new antennas at every earth station location that is currently receiving the customer’s services;
•Fund certain customers’ technology upgrades to reduce their current contracted satellite capacity to free more spectrum for 5G;
•Renegotiate and amend existing customer contracts to reflect new commitments and reduce the overall contracted backlog for each contract relative to the amount of spectrum each customer will no longer be using;
•Forego significant backlog revenues from the start of the clearing due to the compression of services, which will result in certain customers requiring less satellite bandwidth;
•Move 30-50 very large antennas from existing, fully functional teleports to four new locations at a cost of hundreds of millions of dollars to minimize the effect on 5G network deployments of exclusion zones for the protection of vital telemetry, tracking, and control (“TT&C”) sites. Without these migrations, existing fully licensed teleports owned and operated by the CBA membercompanies could impair spectrum for 5G use in at least 14 CONUS Partial Economic Areas (“PEAs”) (and potentially adjacent PEAs as well), including Los Angeles, San Francisco, Baltimore/Washington, Atlanta, and Denver
.•Cover the costs of downlinking non-CONUS services intended to land in CONUS at TT&C/Gateway sites and backhaul such traffic to the originally intended destinations for customers free of charg
Eutelsat made a bold suggestion...https://advanced-television.com/2020/01/27/eutelsat-makes-shock-suggestion-to-fcc/
To show the breakdown of value that Intelsat will gain vs their competitors.
"Eutelsat is also proposing a new – and highly controversial – formula on how the ‘windfall’ payments should be divided, and allocates 56.7 per cent to Intelsat, just 20.1 per cent to SES, 13.4 per cent to itself, only 0.2 per cent to Telesat of Canada and a surprisingly large 9.6 per cent to the Smaller Satellite Operators despite these 4 smaller players having very low relevant penetration – if any – over the US."
So the question is, does over 50% of all the income and incentives that ANY SATELLITE PROVIDER receives make Intelsat look better on paper? Better than it's current stock price? Does the realignment of their debts and increase in capacity call for a valuation closer to their enterprise value and further from the current sub-one billion value? Yes, yes it does. How about above and beyond their enterprise value into la la land? Perhaps.
Seems like 'bag o tricks' FUD spreading to me. Take shots at Boeing and Intelsat at the same time.
Just take a look at how many investment firms have high dollar stakes here and they are mostly bought in way above $6.00, so they aren't letting go. This is a very low float stock at this point.
Plus, the powers that be can pull the trigger any time on boosting the image of Intelsat. To take a swipe at Boeing at the same time is telling to me, because anyone who would read this article and say 'wow, boeing is going to go bankrupt because of this' should read a little deeper.
For all the bad news about Boeing presently (they really did screw up) , we will be hearing trumpets and praises the minute the pigs have their fill of shares.
The world of markets are a sham and c-band alliance has proven beyond a doubt that a. the sat operators get paid or b. 5g doesn't happen in the mid-spectrum. Cut the C- bonds from Intelsat and the books don't look all that bad anymore. Would get a credit upgrade and everything.
Happened to glance at this after hours. Short covering has begun.. https://ibb.co/VtCXLnn
Sort of unexpected, sort of expected. I have not sold a single share and will continue to add as long as there are sellers. Keep it coming, because Intelsat is getting paid sooner or later, regardless of where the SP is.
I don't disagree that it would be a lot better for the US to get a windfall, but one of two things happen. The gov does a fast 5G rollout or they go to litigation for years.
When you read the kind of technical expertise and logistics it will take for it all to happen, there is just no way that they can't include these companies.
And the 'business risk' that they would be forced to take won't sit will with any republicans if it's 'forced'.
Crunchy morsel.
"Finally, attempting to unilaterally transition the C-band through Section 316 would also be unlawful because it would cause the United States to violate its international obligations under the International Telecommunications Satellite Organization (“ITSO”) Agreement.54 The ITSO Agreement provides that the FCC must license the C-band downlink frequencies to Intelsat until the company “waives such frequency assignment(s), [or] uses such assignment(s) in ways other than those set forth in this Agreement....”55 Because an involuntary C-band transition would reassign Intelsat’s licensed C-band frequencies without those conditions having been met, it would violate the Agreement and thus effect a fundamental change to Intelsat’s licenses. For the same reason, an involuntary C-band transition would also fail to ensure that the ITSO Agreement is “more fully complied with” as required by Section 316.56"
Very important filing. Second document is of particular interest. https://c-bandalliance.com/documents/c-band-alliance-can-clear-spectrum-5g-rapidly-efficiently/?utm_campaign=organic%20content&utm_source=twitter&utm_medium=social&utm_content=deganifilingtw
Initial Ownership Table with dates.
https://ibb.co/vqCsrtw
Current possible ownership: 3,233,239
Current value: $24,831,275
Percent of Company: 2.3%
Set your 50/200 ma over to 20% or 10/40 and the 1 day candle just crossed up hard.
5g is the next stock bubble.
5g rollout to this administration is very important. The sat leassees can throw a box of wrenches into the props anytime they want. Follow their c-band alliance, they don't mince words about not losing this pay day. Worst thing that can happen here is billions in cash infusion to pay down their D- rated bonds and free satellites from the gov to keep their bandwidth.
This company used to be toast, but they shot the ground and found oil on their land..
All aboard. Train leaving the station.
FYI this is not a penny stock OTC play. This is fed level tinkering at the highest level. Literally, in SPACE.
Breakout confirmed. No resistance until 9.10
Tweet from C-Band Alliance - Headed by Intelsat.
How should we think about the outlook for U.S. #5G in 2020? CBA’s Head of Advocacy and Government Relations Peter Pitsch joined @StrategasRP at their annual Policy Conference to discuss his perspective. Peter’s 3 takeaways:
“The U.S. is best suited to win the #Raceto5G if we can clear #Cband quickly, and CBA’s members are best suited to run this transition.”
“Over 20 countries already have access to the spectrum needed to power 5G. The U.S. must move quickly to win the race to 5G by clearing #Cband.”
“Consumers can start seeing the benefits of 5G within 18-36 months from the time of an FCC final order.”
Breakout watch above 7.61 (7.66 high of the day). Target over $9 after that.
News Feature on Bloomberg yesterday. https://finance.yahoo.com/news/c-band-analyst-says-spectrum-204628878.html?.tsrc=rss
News ready to start rolling in.
To recap who these guys are...
From Their Website:
Investor Overview
Company Profile
We operate the world’s largest satellite services business, providing a critical layer in the global communications infrastructure. We generate more revenue and more EBITDA, operate more satellite capacity, hold more orbital location rights, contract more backlog, serve more commercial customers and deliver services in more countries than any other commercial satellite operator. We provide diversified communications services to the world’s leading media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications, multinational corporations and ISPs. We are also the leading provider of commercial satellite capacity to the U.S. government and other select military organizations and their contractors.
And a billion dollar market cap? For comparison, Snapchat has a negative 1.2 billion operations (don't think they are paying off SATELLITES IN SPACE, what do they do, update their app?) and 90% higher float vs. Intelsats -500m operations. It just doesn't make sense for Intelsat to be where it is. This is a massive tree shaking imho.
"World's largest satellite services business"
Straight from Wikipedia..." In May, the company announced it would be purchasing four new high-performance Boeing EpicNG 702 MP satellites."
They don't just trade services and not even the FCC can just 'take them out'. So even if the public auction goes through, awe they only get the lions share of the pie being the largest operator.
I am trading Jan. 2021 options like I expect a 10b market cap or a bandwidth buyout by the cell companies. Why don't ATT, Verizon, Sprint just make their own C-Band alliance and spend the One B to just own the rights?
Tricky stuff.
My logic is this.
Even if the FCC does a public auction (they aren't) it would take far to long to move the current riders off their horses to keep with the 'fast' 5G rollout.
From speculation I have been reading by industry members, there would be lawsuits ad infinitum and when it comes down to it, even 'if' the FCC just moved forward with the band. What incentive do companies like Intelsat have to press the buttons and cut the wires?
Either way, Intelsat is going to get a WINDFALL of capital to re-position their debts and get fresh terms. I wouldn't be surprised if there are mergers to keep the bandwidth for their current customers intact and with a much better looking balance sheet to get the capital.
My contrarian self is heavily into 'I'.
(Added again) Call Option for 3/20/20 - Strike: 16
Call Option for 3/20/20 - Strike: 21
Call Option for 6/19/20 - Strike: 33
Call Option for 1/10/20 - Strike: 7.5 and 8.5
Call Option for 2/21/20 - Strike: 12 and Strike 14
Call Option for 3/20/20 - Strike: 16
Looking for a nice bounce here today.
Just took a position today. Looking good all the way around. Really impressed with their website.
Went current for some reason and at .0001 that reason is up.
Are you serious? Boom baby.
I have a good feeling about this. Things went ultra dark right after we hush hush went current. Only reason I am here. Chips in at .0001 bb