[Satellite TODAY 04-02-13] Intelsat Global Holdings (Intelsat) has announced details of its long awaited IPO, which has been the talk of the satellite industry in recent times. The company could raise around $543 million through an IPO of 21.7 million shares of common stock, likely to be priced between $21 and $25 per share. The move has long been touted and with IPO announcements on an upswing this year, the notice has come as little surprise.

    Intelsat’s recent results showed that it had generated revenues of $2.6 billion in 2012, with a net loss of just under $147 million for the year. Jacob Gullish, director of the Space & Telecommunications Division at Futron Corp, said this was “an important step” for the company as it looks to move forward with its plans. “The company has been internally preparing for an IPO for an extended period. To some extent this constrains organizations – deal-making, marketing, external communications, etc. Overall, capital markets appear strong, and the satellite industry has retained strength and attractiveness through the recession. So there is no surprise that management is acting now and moving aggressively to finalize an

    Gullish is not surprised that the operator is looking to do the IPO this year. “There is clearly a ‘new normal’ in the financial community and clear changes to the satellite and space industry. Intelsat is the largest player in its segment, and overall the numbers of IPO have been limited; more so if you look are large IPOs over $1 billion. Given this backdrop, it’s no surprise the company opted to push out its offer into springtime in the hope of optimizing results. You only get one IPO so make the best of it,” he added.

    Hoyt Davidson, president, Near Earth, believes Intelsat’s announcement is “welcome news” for the industry. “It makes sense with the broad stock indices at new highs and with a stronger IPO market in the last quarter. Money is still coming into the U.S. equity market given low bond yields,” he said.

    In terms of how attractive Intelsat stock maybe to investors, Davidson adds that “the FSS industry has proved recession resistant with mid single digit growth during massive economic disruption. But near term growth may depend more on success of new services like broadband and cellular backhaul (until ultra HD kicks in later in the decade) and growth in developing regions like South Asia, Africa and Latin America. There, I would expect Intelsat IPO investors to be those looking for exposure to these growth sectors and regions in a business with reasonable downside protection from existing FSS services in developed markets.

     “FSS stocks share some characteristics with ‘utility’ type stocks, meaning lower growth and lower risk. But, Intelsat will still be heavily levered and unlikely to support a utility type dividend rate for some time, Key to attracting investors is offering moderate growth at a reasonable price plus the benefits of having a geographically diverse revenue base with great developing world exposure,” he said.

    Gullish also expects the stock to perform well. “Intelsat is a market leader and should perform well over the near term, and over the longer term has certain internal capabilities and advantages that only a large provider can offer. So yes it’s a relatively safe long-term bet,” he said.