Intelsat Stock will be “Very Interesting” to Investors — Analyst

[Satellite TODAY Insider 05-22-11] Intelsat Global (Intelsat) is looking to rise to $1.8 billion through an IPO. The operator filed the forms with the SEC in the United States last Friday. The potential IPO looks as though it will finally happen. Sarah Simon, a satellite equity analyst at Berenberg told Satellite Today Insider, “I am not surprised. It had been expected for some time given general investment timeline of private equity investors. The market is very volatile at the moment but Intelsat is listing on the less volatile U.S. market and obviously is a stable business which can be prized at times of volatility.”
            Another industry source that preferred to remain anonymous added to Satellite Today Insider, “I think the timing makes a lot of sense. We are still in difficult times generally for such transactions, particularly given the continuing financial volatility in Europe and even the recent JP MorganChase situation, but following on the heals of what appears to be a fairly successful Facebook IPO, now is probably as good a time as any. Also, Intelsat just received FCC approval for being able to move forward with the IPO (dealing with the issue of whether the IPO would result in a change of control, which the FCC must pre-approve in the case of all companies holding FCC licenses), and the FCC’s authorization is only valid for about 90 days (although, if necessary, Intelsat could seek an extension of it, although that would require some effort and cost).”
            The operator, the world’s biggest FSS operator, has huge influence across the industry, and an IPO could create further interest in the satellite industry. Simon believes the stock could prove an attractive one for investors. Simon covers both Eutelsat and SES. She says, “Satellite stocks have performed well during uncertain economic time, but domestic U.S. investors don’t have these stocks in their benchmark. So Intelsat could see strong interest. They are very comparable to SES and Eutelsat although there is more debt. The real plus is stability. Depending on how valuation looks versus Eutelsat and SES and also the tower companies like Crown Castle, Intelsat could be very interesting for investors. This will increase if there is an acceleration in the organic growth rate with the new fleet.”

            In terms of whether there is anything that might deter investors, Simon added, “Growth has lagged Eutelsat and SES so that might be viewed negatively depending on how management perceives the outlook for growth. The usual caveats about very long-term need for satellites, for example, the threat of OTT also apply, but near the term the launch of such things as Ultra HDTV could be very good for Intelsat.”

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