The Federal Communications Commission on a 3-2 vote on Friday approved chairman Ajit Pai’s plan for as much as US$9.7 billion to clear the frequencies, with the money coming from bidders expected to include large mobile network operators such as Verizon Communications. The FCC will sell the airwaves at a public auction. Pai earlier proposed that Intelsat get as much as US$4.85 billion for clearing airwaves quickly. Intelsat, which had asked for a higher payout, fell as much as 18 per cent and closed down 4.9 per cent at US$3.86 in New York trading.
Soon after the vote in Washington, fellow satellite provider SES was little changed and Eutelsat Communications closed down 2.3 per cent in Paris. The FCC did not immediately release the text of its order, leaving it unclear if commissioners had changed proposed payments during deliberations ahead of the vote at the agency’s monthly meeting in Washington. Pai said the record did not support substantially increasing Intelsat’s share. Intelsat said it would assess the order’s impact once the document is issued.
«As we do so we will preserve all options to ensure our company is treated fairly and to protect our spectrum rights,» Intelsat said in an emailed statement. SES and Telesat, another satellite provider, in a joint statement congratulated Pai. SES earlier opposed Intelsat’s bid for a fatter payment. FCC Commissioner Geoffrey Starks, a Democrat, said disagreement among carriers leaves «a very real possibility» that the agency will end up «stuck in litigation and with any auction on indefinite hold».
Luxembourg-based Intelsat in a filing asked for 60 per cent or more of the pot. Fellow satellite provider SES, which also would give up airwaves, in a filing said it should get as much as Intelsat, compared with 41 per cent as proposed by the FCC. Intelsat’s finances «may remain stressed even with a large relocation payment» because core portions of its business are deteriorating, Stephen Flynn, a Bloomberg Intelligence analyst, said in a February 27 note. Both FCC Democrats voted against the measure, with Jessica Rosenworcel, the agency’s senior Democrat, saying the agency wrongly failed to involve Congress, which could direct the billions of dollars for public purposes such as building rural broadband.
The FCC on February 7 released its plan to pay the US$9.7 billion to Intelsat, SES and other companies if they met deadlines for leaving the airwaves, and another US$3.3 billion to US$5.2 billion in reimbursement for costs of making the switch. SES would get about US$4 billion, and Paris-based Eutelsat could receive US$468 million. Verizon has told investors that it is very interested in so-called mid-band airwaves, like those to be offered at the auction approved by the FCC on Friday. The largest US wireless carrier has been adding cell sites in more areas to address rising data traffic demands, but analysts have said Verizon needs more airwaves to help expand network capacity.
Verizon chairman Hans Vestberg called the FCC’s action «another huge step forward». «The FCC clearly understands the need to move swiftly to ensure that critical wireless spectrum is quickly made available so that we can build the networks of the future,» Vestberg said in an emailed statement. The FCC’s action «is a critical step toward unlocking the 5G economy», Meredith Attwell Baker, president of CTIA, said in an emailed statement. The trade group represents major carriers such as AT&T, Verizon and T-Mobile US.
David Tepper’s Appaloosa hedge fund took an activist stake of 7.4 per cent in Intelsat and has called for the company to reject the FCC’s plan.