Zombies in Space?

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A very well-placed source tells us that Global Giant Intelsat has been considering selling assets.

Having leveraged itself up to the eyeballs at the peak of the boom in 2007, Intelsat has in the region of $15 billion of debt, compared with an equity market capitalisation of just $1.7bn. Management pocketed many tens of millions on the IPO, since when the shares have fallen.

On Revenues of $2.6 billion, Intelsat has EBITDA of $1.9 billion and interest expense of $1.1bn. In an environment where new investment is needed to replace an ageing fleet, interest rates are likely to rise in coming years and Intelsat’s market share is being nibbled away by regional operators, some have speculated that the best it can do is try to pay down its debt in small increments over a very long period of time to try to grow equity value. Shareholders could be in for a long wait, so Intelsat, it is rumoured, entered into negotiations to sell some satellites to a European Satellite operator. This operator walked away because the transaction did not make sense for them.

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