Satellite C-band is worth billions, but how many?

PARIS — Because the U.S. Federal Communications Fee prepares to determine how one can reallocate some or all the nation’s satellite tv for pc C-band downlink spectrum for the approaching wave of 5G cellular communications providers, consultants say appraising the financial worth of the spectrum stays difficult. 

Satellite tv for pc operators Intelsat, SES and Telesat collectively stand to achieve billions of if the FCC choses their spectrum repurposing plan over competing proposals from cable and mobile operators. What number of billions they might get from parting with 200 megahertz of spectrum is unknown, nevertheless. 

“Spectrum values are very badly understood by fairness buyers,” Fred Turpin, JP Morgan’s international head of media and communications, stated Sept. 9 on the World Satellite tv for pc Enterprise Week convention right here. 

These buyers, he stated, have to know quite a lot of unfamiliar however nonetheless influential variables, starting from particular regulatory insurance policies to the spectrum clearing course of and the affect of the timing of an FCC determination. These variables create uncertainty for buyers, leading to volatility for the inventory costs of corporations concerned, he stated. 

Turpin stated JP Morgan’s “finest math” suggests Intelsat and SES are every advertising and marketing “a pair billion ” of C-band spectrum. 

Intelsat and SES are the most important members of the C-Band Alliance, a bunch that features Telesat Canada and, till not too long ago, Eutelsat Communications. The C-Band Alliance proposes to divide any proceeds primarily based on every member’s share of U.S. C-band revenues generated in 2017. Whereas the C-Band Alliance hasn’t quantified their collective U.S. C-band revenues, the group says Intelsat and SES generated 90-95% of 2017’s complete, whereas Telesat’s share amounted to a single-digit share. 

Giles Thorne, an fairness analyst at Jefferies Monetary Group, estimates that Intelsat and SES would every pocket round $three.three billion “time discounted and put up all clearing prices.” Telesat would seemingly accumulate round $440 million, assuming the Canadian operator’s stake was the identical as former member Eutelsat, Thorne stated by electronic mail. 

These numbers might be increased, although. 

“Everyone is attempting to make an evaluation on what the seemingly chance of some kind of end result is,” Turpin stated. “There are attainable outcomes right here which might be [in the] tens of billions of vary.”

ACA Connects, a group of cable and web suppliers that has its personal C-band plan, has estimated the worth of the complete 500 megahertz at as much as $60 billion. 

Invoice Tillson, government chairman at Embody Digital Media, a tv broadcast firm that leases capability from Intelsat and SES, estimated that these two operators, plus Telesat, collectively might acquire $34 billion by promoting C-band spectrum. Satellite tv for pc operators might not get to pocket that full quantity although, he stated. 

“Politicians which have jumped in and stated some portion of that ought to come back again to [the U.S. government], so I don’t suppose that is over but, Tillson stated.

The C-Band Alliance has beforehand stated that a few of any proceeds must go towards new satellites and different capital expenditures that may be wanted to supply the identical degree of service with 200 megahertz much less C-band spectrum than they at the moment have. That infrastructure funding would contain a number of new satellites, spectrum filters for satellite tv for pc dishes on the bottom, centralizing teleport operations and extra. 

C-Band Alliance members additionally count on to pay taxes on any proceeds and to make a voluntary contribution to the U.S. Treasury. 

“The large problem for buyers is knowing the potential that underlies the spectrum,” stated Jon Yourkoski, managing director of Morgan Stanley’s funding banking division.

Yourkoski stated choices in different nations to make use of C-band spectrum across the three.5 gigahertz band for 5G providers helped enhance the worth of U.S. C-band downlink spectrum, which stretches from three.7-Four.2 gigahertz. A number of nations together with Spain, Qatar, and to some extent, China, have already awarded spectrum at three.5 gigahertz for cellular, in accordance with an April report from analysis agency Analysys Mason. 

Yourkoski stated the unsure timing of an FCC determination presents a problem to figuring out the spectrum’s final worth. A call was beforehand anticipated by June however has since been delayed till the autumn. 

Throughout that delay, the U.S. Justice Division’s antitrust division authorised the merger of mobile operators Dash and T-Cellular, contingent on divesting a few of its pay as you go cellular enterprise to Dish Community. T-Cellular has submitted a competing spectrum reallocation plan to the FCC that requires giving mobile 5G operators all 500 megahertz of satellite tv for pc downlink spectrum as a substitute of simply the 200 megahertz the C-Band Alliance proposes to vacate. Yourkoski stated it’s unclear how Dash-T-Cellular merger will affect the FCC’s timing on a C-band determination.