C-Band Clearing Costs Driving Need for Chapter 11, Intelsat Says
New satellites and other C-band clearing expenses -- an estimated $1.2 billion worth through the end of 2021 and $1.6 billion in total -- helped prompt Intelsat to file for Chapter 11 bankruptcy Wednesday, said in its application with U.S.…
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Bankruptcy Court in Richmond. Chief Financial Officer David Tolley said in a declaration (in Pacer, case 20-32299) the company intends to clear the lowest 120 MHz of the band by the Dec. 21, 2021, deadline to be eligible for $4.87 billion in accelerated clearing payments. Tolley said Intelsat has close to $15 billion in debt, but "business prospects remain healthy." He said it also has "materially lower revenues" due to COVID-19's effect on such key customers as airlines and cruise ships, and on its business carrying broadcast signals of sports and other live events. Tolley said the company has a commitment for financing that needs court approval but would give it enough working capital to clear the C band, fund the bankruptcy case and let Intelsat operate. An accompanying motion asked for permission to incur obligations for the clearing. It said its three-part clearance plan involves building and launching multiple satellites over the next 30 months to replace the capacity lost from the C-band compression upgrades and relocating teleport sites from urban to rural locations to mitigate 5G interference. The company asked the court to authorize it to implement the clearance on an accelerated schedule. The FCC emailed Thursday that it "appreciates Intelsat's statement that '[o]ne of the primary catalysts' for its voluntary filing for bankruptcy is a 'desire to participate in the accelerated clearing of C-band spectrum.' We will continue to move forward with the C-band auction process and look forward to working with satellite operators, wireless companies, and others toward that goal." Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., said Intelsat’s bankruptcy announcement “reveals what many suspected all along: Intelsat had no intention of accepting the FCC’s deal” on the C-band auction. The FCC “should withdraw its offer, take control of America’s spectrum and save taxpayers billions of dollars instead of shelling out that money to foreign companies,” Kennedy said. He has repeatedly raised concerns about the FCC’s C-band auction plan, including its proposal for $9.7 billion in incentive payments to Intelsat and other satellite incumbents (see 2003100022). SES also said it plans to make the accelerated C-band clearing deadlines (see 2005140055).