Intelsat Restructuring Costs Add Up to a Net Loss in Q3 2021
Global satellite operator Intelsat generated a 7% year-over-year increase in total revenue during its third fiscal quarter of 2021, but its hefty legal and restructuring costs caused net losses to jump from $15.9 million to $145.7 million.
Intelsat earned $526.1 million in revenue and spent $98.3 million in reorganization costs in Q3, including professional and financing fees related to its debtor-in-possession senior secured credit facilities. The operator’s income tax expenses also increased $21.3 million year-over-year due to higher income from its U.S. subsidiaries — mainly its In-Flight Connectivity (IFC) business. The operator also incurred $17.9 million of C-band clearing expenses during the quarter.
These are the first results Intelsat has released since Stephen Spengler, the operator’s CEO for the past 18 years, surprised many last month with an an announcement that he was retiring from the company once it emerged from Chapter 11 bankruptcy. He later told Via Satellite magazine that he had planned the retirement for some time, and that the decision “wasn’t easy.” Intelsat has yet to name a CEO to replace Spengler.
Intelsat’s third quarter results also highlight just how important its August 2020 acquisition of Gogo‘s commercial In-Flight Connectivity business was to its core financial health. The operator’s network services division grew its Q3 revenues by 43% year-over-year to $241 million on the back of increasing demand for IFC services and the expansion of services with mobility and network customers.
However, Intelsat still has a way to go to get back to the level of network services revenue it was generating nine years ago in 2013, when the division was averaging $290 million per quarter.
Intelsat’s media division revenues continued to decline in Q3, dropping 11% year-over-year to $181.1 million. The operator attributed this quarter’s decline to a planned service migration by a specific customer from Intelsat’s network to the customer’s own network assets. Intelsat’s Q3 media revenue peaked back in 2017, when it reached $237 million. It has gradually declined ever since.
The operator’s Q3 government services revenue decreased 12% year-over-year to $95 million, due to a “one-time equipment sale” in 2020, offset by new hosted payload services on Intelsat’s Galaxy 30 satellite and increased demand for FlexMove land mobility managed services. Intelsat’s government revenue has hovered between $95 million and $98 million for several years.
Intelsat’s average fill rate remains at 74% and its contracted backlog dipped from $6 billion in Q2 2021 to $5.7 billion in Q3 2021.
“We delivered strong quarterly sequential results despite the secular headwinds impacting the satellite industry,” said Spengler. “Network Services benefited from the continued recovery in North American airline travel resulting in higher in-flight connectivity revenues. Media was impacted by a large planned service migration from the Intelsat network onto customer-owned assets coupled with the ongoing business trends. The start of hosted payload service on our Galaxy 30 satellite and continued demand for our FlexMove land mobility managed services created positive momentum for our Government business.”