A major investor in satellite service provider Intelsat pressed the company to reject a proposal from US regulators offering billions of dollars in exchange for access to its spectrum, arguing the terms are unfair and expose it to financial risk.
A plan recently unveiled by FCC chairman Ajit Pai would offer satellite service providers up to $9.7 billion in incentives to swiftly free up C-Band spectrum (3.7GHz to 4.2GHz) so the airwaves can be used for 5G. Intelsat stands to receive as much as $4.85 billion if it successfully meets the transition requirements.
But in a letter to Intelsat’s board, Appaloosa Management president David Tepper derided the sum as “an affront when compared to the values achieved in auctions of comparable spectrum across the globe over the past decade”.
The company owns a 7.4 per cent stake in Intelsat.
Tepper also took issue with the proposed process for distributing incentive and reimbursement funds, arguing it requires satellite companies to “front billions of dollars of expenditures” in 2020 without the prospect of payment until May 2021. He said taking on that risk “could easily trigger an insolvency before relocation can be accomplished”.
He pressed Intelsat to negotiate “fair commercial terms” with the FCC. If it cannot do so, he said the company “has no choice but to resort to bankruptcy and litigation” to protect its spectrum assets.
The FCC is scheduled to vote on the plan at its next monthly meeting, scheduled for 28 February.Subscribe to our daily newsletter Back