SES, Intelsat Rise as U.S. FCC Advances Spectrum Sale Proposal

(Bloomberg) -- U.S. regulators advanced a proposal that could let Intelsat SA and SES SA reap billions of dollars in fees from mobile providers using airwaves now devoted to TV broadcasters and cable companies, and shares jumped as much as 14 percent.

The Federal Communications Commission voted 4-0 to seek comments on rules for letting terrestrial services use airwaves long dedicated to the satellite services. The action won’t be final until a second vote, which hasn’t been scheduled.

Since the Luxembourg-based companies announced their joint proposal Feb. 9, Intelsat shares have soared more than 600 percent, as investors anticipate an opportunity to reduce the company’s crushing $14 billion in debt. Intelsat rose 14 percent Thursday before trading at $19.26, or up 10.4 percent, at 12:40 p.m. New York time. SES depositary receipts were up 85 cents, or 5.2 percent, to $17.06.

Intelsat and SES say they’re reacting to the FCC’s push for more airwaves for domestic wireless companies to accommodate the so-called internet of things that will enable millions of devices in homes, cars and factories to chatter among themselves.

The companies have proposed to the FCC that they be allowed to devote one-fifth of their airwaves to new uses by mobile network operators. Current users, which include the likes of Comcast Corp. and CBS Corp., would operate on the remaining four-fifths.

Success for the proposal could yield a “transformative windfall” of $5 billion to $13 billion to be shared by the satellite companies, Patrick Wellington, a Morgan Stanley analyst, said in a May 29 note.

Intelsat and SES serve more than 90 percent of the market in the airwaves swath at issue, known as the C Band, Steve Spengler, Intelsat’s chief executive officer, said in an email before the vote.

Broadcasters and cable providers have expressed apprehension that their video programming may encounter interference from the strong terrestrial signals that would use the airwaves.

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