A couple months after SES confirmed it was in talks about a possible combination with rival Intelsat, the gloves are off. The two are no longer talking about combining operations, and SES is reveling in a district court win over Intelsat and its C-band spectrum sale proceeds.
Bloomberg last week reported that SES and Intelsat had ended talks about a possible combination; the talks were revealed in late March. Both long-timers in the satellite industry, the reasoning was that a tie-up of SES and Intelsat potentially would help them compete against the likes of Elon Musk and Jeff Bezos.
In a statement Thursday, SES confirmed discussions had ceased, reminding everybody that there was never any guarantee a transaction would materialize.
The day prior, a judge sided with SES in the ongoing dispute over $421 million of Intelsat’s C-band proceeds, saying a previous bankruptcy court decision erred in its decision that favored Intelsat. U.S. District Court for the Eastern District of Virginia Judge Robert Payne sent the case back to the bankruptcy court.
In a statement, SES called it a “major appellate victory” in its case against Intelsat over the latter’s refusal to honor its promise to evenly split billions of dollars the parties received for clearing part of the C-band for 5G terrestrial use.
SES is holding firm that the two agreed to a 50:50 split on the $9 billion C-band proceeds while Intelsat insists their split was no longer valid after the FCC decided to sell C-band frequencies in a public auction. They initially had been lobbying together for a private, satellite-led process.
“SES had brought its claims against Intelsat in bankruptcy court after Intelsat filed for chapter 11. The bankruptcy court found Intelsat not liable under the parties’ contract, but on appeal, the district court agreed with SES that the bankruptcy court took ‘a clearly erroneous view of the record’ without conducting an ‘independent analysis of the extensive extrinsic evidence’ favoring SES,” the company said in a statement provided to Fierce. “The district court remanded the case to the bankruptcy court to consider the ‘very strong extrinsic evidence’ favoring SES’s position.”
In its statement, Intelsat said it doesn’t believe this latest court ruling will change the case in the long run.
“We disagree with Judge Payne’s decision on the contract, but we do not believe that this will change the ultimate decision in this case,” Intelsat said in a statement shared with Fierce. “Judge [Keith] Phillips heard all of the evidence in the case as the trier of fact, and we remain confident that he will come to the same conclusion as he did in his original opinion on the merits of SES’s claims.”
C-Band Alliance history
SES and Intelsat were both among the founding members of the C-Band Alliance that was formed in 2018 to set up a mechanism for clearing part of the C-band to make way for 5G terrestrial services. They parted ways when they couldn’t agree on how the proceeds should be split.
As part of an FCC formula adopted in 2020, satellite companies were given a chance to clear the lower 300 megahertz of the C-band on a faster schedule in exchange for accelerated relocation payments.
The first batch of the C-band to be cleared was 120 megahertz of spectrum in 46 Partial Economic Areas (PEAs) by December 5, 2021. The next big milestone is December 5, 2023, when an additional 180 megahertz nationwide will be cleared in the remaining PEAs.
Verizon was the biggest bidder in the C-band auction, which netted more than $80 billion for the U.S. Treasury.