Zombie Watch

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We described Intelsat on October 10th as a Zombie that would have to sell assets. Well, it has now lost 50% of its IPO value and announced a “partnership” with Azercosmos for a joint satellite. So clearly not able to finance replacement satellites alone, it is now relying on small operators to help it to do that, and in turn gives away valuable spectrum rights.

The bond holders rely heavily on Intelsat spectrum rights for their security. Those rights are only as valuable as the cash flows that can be taken from them, and giving part of that away doesn’t enhance their value. Some customers arriving in Washington in preparation for the big annual show this week were speculating that Intelsat will lose business because of financial concerns – who wants to make a long term investment if you might end up having to do business with bond holders and Chapter 11 lawyers.

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