Intelsat announces Third Quarter 2019 results
Intelsat S.A., operator of the world’s first Globalized Network and leader in integrated satellite solutions, today announced financial results for the three and nine months ended September 30, 2019.
Intelsat reported total revenue of $506.7 million and net loss attributable to Intelsat S.A. of $148.3 million for the three months ended September 30, 2019.
Intelsat reported EBITDA1, or earnings before net interest, gain on early extinguishment of debt, taxes and depreciation and amortization, of $336.1 million and Adjusted EBITDA1 of $356.1 million, or 70 percent of revenue, for the three months ended September 30, 2019. Free cash flow used in operations1 was $10.1 million.
Intelsat’s Chief Executive Officer, Stephen Spengler, said, “2019 is progressing to our expectations, expanding our managed services strategy to the benefit of our network services, media and government businesses. Our focus on the wireless sector continues to yield benefits, with new infrastructure service starts in the third quarter in Africa, Oceania and Latin America. Further, with Intelsat 39 entering service this month, we expanded the essential broadband infrastructure we provide to Myanmar under a long-term agreement, as well as increased and enhanced our mobility infrastructure throughout the Indian Ocean and Asia regions.
Spengler concluded, “The progression of our C-Band Alliance proposal under the U.S. Federal Communications Commission C-band proceeding is positive and productive. Our focus on an expanded spectrum clearing approach clears maximum spectrum for 5G—300 MHz inclusive of a 20 MHz guard band—while maintaining the reliability of the U.S. television and radio ecosystem. In summary, the CBA members have the expertise and knowledge necessary to implement a spectrum transition solution efficiently, expeditiously and with full accountability for the timetable and safety to the ecosystem on which nearly 120 million American homes rely. We continue to demonstrate that the CBA plan represents the fastest path to cleared spectrum for 5G in the U.S.”
Third Quarter 2019 Business Highlights
Intelsat provides critical communications infrastructure to customers in the network services, media and government sectors. Our customers use our services for broadband connectivity to deliver fixed and mobile telecommunications, enterprise, video distribution and fixed and mobile government applications. For additional details regarding the performance of our customer sets, see our Quarterly Commentary, available on our website.
Network services revenue was $180.8 million (or 36 percent of Intelsat’s total revenue) for the three months ended September 30, 2019, a decrease of 9 percent compared to the three months ended September 30, 2018. The network services result includes $8.1 million in reduced revenue following the April 2019 loss of the Intelsat 29e satellite.
Media revenue was $222.9 million (or 44 percent of Intelsat’s total revenue) for the three months ended September 30, 2019, a decrease of 4 percent compared to the three months ended September 30, 2018. The media result reflects an increase of $4.4 million in early termination fees.
Government revenue was $95.7 million (or 19 percent of Intelsat’s total revenue) for the three months ended September 30, 2019, a decrease of 3 percent compared to the three months ended September 30, 2018.
Average Fill Rate
Intelsat’s average fill rate at September 30, 2019 on our approximately 1,750 36 MHz station-kept wide-beam transponders was 80 percent, as compared to an average fill rate at June 30, 2019 of 78 percent on 1,750 transponders. In addition, at September 30, 2019 our fleet included approximately 1,200 36 MHz units of high-throughput Intelsat EpicNG capacity, remaining unchanged from June 30, 2019.
Intelsat successfully launched Intelsat 39 on August 6, 2019. The satellite will provide connectivity services for mobile network operators, enterprises and governmental entities, as well as aeronautical and maritime mobility service providers operating in the Europe, Africa, Middle East and Asia-Pacific regions. Intelsat 39 entered into service on October 14, 2019.
Subsequent to quarter end, on October 9, 2019, Northrop Grumman’s in-space servicing vehicle, Mission Extension Vehicle 1, or MEV-1, successfully launched and is headed to a rendezvous and docking with Intelsat 901, anticipated to occur in early 2020. The MEV-1 service is designed to extend the life of deployed satellites where the existing technology is still viable for the applications served.
At September 30, 2019, Intelsat’s contracted backlog, representing expected future revenue under existing contracts with customers, was $7.2 billion, as compared to $7.5 billion at June 30, 2019.
C-band Proceeding at the U.S. Federal Communications Commission ("FCC")
The C-Band Alliance (“CBA”), of which Intelsat is a founding member, continues to build consensus on its plan to clear satellite operator- licensed C-band spectrum to support U.S. leadership in 5G while also protecting essential television, radio and data services currently using C-band spectrum. On October 28, in an ex parte filing to the FCC, the CBA updated the amount of spectrum to be cleared under its proposal to 300 MHz, inclusive of a 20 MHz guard band. The spectrum would be cleared in two tranches, 120 MHz within 18 months from an FCC order and the balance within 36 months of a CBA-led auction process.