The FCC ruling would allow Intelsat and SES to sell access to their spectrum in an effort to accelerate the deployment of 5G
NEW YORK, June 28, 2018 /PRNewswire/ — This week, Sahm Adrangi of Kerrisdale Capital, a private investment management company, published a report explaining its deep-rooted position in the standings of two of the world’s largest satellite service providers, Intelsat S.A. (NYSE: I) and SES S.A. (EPA: SESG). Kerrisdale discovered that Intelsat and SES are worth much more than their current share prices – 9x more and 3x more, to be exact. The release supports that the FCC will likely approve their proposal for repurposing parts of their spectrum which can be applied to 5G mobile use.
The full report can be found at https://kerr.co/i-ses.
The FCC is currently processing through proposals to re-distribute the frequencies between 3.7GHz and 4.2GHz for wireless usage. Several satellite service providers have filed proposals on how to best handle the changes in policy. Intelsat and SES filed a proposal taking a market-based approach that allows for a group of incumbent C band users to keep responsibility over transitioning their customer out of the band, as well as selling the spectrum.
“The approach spearheaded by the Intelsat/SES plan is the most practical way to allow current incumbents to utilize the band while making the spectrum available for 5G use,” said Sahm Adrangi, CIO of Kerrisdale Capital. “The spectrum will be best utilized without the regulatory intervention.”
Kerrisdale expects the Intelsat/SES concept to come to fruition in the second half of 2019. If the FCC approves the Intelsat/SES proposal it could form the core of the agency’s final order and rulings moving forward because it offers the fastest and most practical option for bringing 5G to C band. The proposal ensures the cooperation of the satellite operators themselves, making it a win-win for the FCC and satellite service providers. With 100 MHz within 18-36 months and eventually at least 300 additional megahertz over time, both parties will benefit from the ruling.
As the nation transitions to 5G, the vacated C band could be a valuable asset since the frequencies provide a significant amount of available mid-band spectrum that is not overwhelmed with LTE subscribers. The available band capacity can accelerate the improvements for wireless customers, enabling drastic improvements in the network quality. Since other countries are also repurposing the C band, providers can expect to see a complete global network of equipment and user devices in the near future.
Over the past few years there has been a shift in the FCC’s flexibility of applied licensing including approving, selling, leasing, and subdividing licenses. This trend has been evident under both the Democrat and Republican parties who have allowed licensees to be free to do what they wish with their spectrum, as long as they comply with the standard guidelines implemented to protect all parties from conflict.
“The purpose of the Intelsat/SES proposal is to permit current licenses the right to repurpose and sell portions of the band as they see fit as long as they abide by the rules enforced by the FCC spectrum policy,” Adrangi said.
Conference Call Schedule
- Kerrisdale is hosting an informational conference call on Wednesday, June 27 at 1:00pm ET to discuss the details of the Intelsat and SES report.
- Dial 866-834-3313 (domestic) or 409-981-0700 (international) and reference conference ID 9798589 to participate in the conference call.
About Kerrisdale Capital
Kerrisdale Capital Management, LLC, is a fundamentally-oriented investment manager that focuses on long-term value investments and event-driven special situations.
Kerrisdale Capital Management, LLC is a member of the Financial Industry Regulatory Authority, CRD number 160804.