Details Of C-Band Order Positive For Intelsat

Press reporting suggests that the C-Band Order will come at the December 12th FCC Open meeting (with a draft made available 3 weeks earlier). The report suggests that the Order would allow for 280MHz of C-Band spectrum to be sold via a private auction in 1H20 (though this could potentially come in two auctions). In addition, the auction is unlikely to include combinatorial bidding. Overall, we find the report supportive of our Intelsat Buy thesis (see initiation report HERE) as well as our policy reporting on the likely timing, amount of spectrum and likely party holding the auction.

The most important data point is that the spectrum will be sold via private auction; this increases the likelihood of a low government cut of the overall proceeds (our base case is 20%). In addition, a private auction lowers the odds of rules that would artificially undermine bidding tension (such as overly proscriptive bidding caps). Our Intelsat Buy case rests on the view that 1) an auction of the C-Band will raise $50BN in proceeds, and 2) that the government cut will be around or below our base case of 20%. On the heels of press reporting on the details of the Order, we continue to believe in both drivers of our thesis.