Today’s class will be discussion-based. This prompt is meant to help guide your discussion. We will convene as a class after 20-30 minutes to discuss the issues raised.
It is May of 2020. Intelsat, the operator of the largest GEO satellite fleet, just filed for bankruptcy.
This isn’t too much of a surprise. The GEO segment has been struggling lately, with streaming and mobile broadband eating into satellite TV broadcast revenues and the specter of LEO satellite constellations (with lower latencies and broader markets) looming large. Major satellite manufacturers have even been considering leaving the segment. It’s not all sector-level trends either: Intelsat has made some questionable business decisions while under private equity management, including some acquisitions which may not have been the best ideas. Finally, the unfolding pandemic hasn’t been great for Intelsat (though the latest insights from Elon Musk and the White House suggest the pandemic isn’t that big a deal and should be over pretty soon). The final result is that Intelsat has a bunch of valuable assets (including satellites, GEO slots, and GEO spectrum—see Macauley (1997) for detail on the slots and spectrum), a lot of debt, and an unclear path back to profitability. Interestingly, the CEO of Intelsat has described the bankruptcy filing as a success.
Years ago, the Pentagon bailed out Iridium (a LEO satellite constellation) to ensure military access to satcom capabilities. Now some are calling for Intelsat to be bailed out as well, citing strategic issues around 5G and space infrastructure. Others disagree.
From the perspective of an analyst in May 2020: What should/will happen to Intelsat?
Some questions to help focus your discussion:
Try to generate strong arguments on both sides of the questions, assessing which you find most compelling and why. Try also to think of additional questions which you may not be able to answer but think are important in thinking about these questions.