TAMPA, Fla. — Satellite operator SES has another shot at getting a larger share of Intelsat’s C-band clearing cash after an appeals court made a judgment in its favor.
Before Intelsat emerged from Chapter 11 last year to slash its debt load by more than half to $7 billion, SES petitioned its U.S. bankruptcy court without success to equally split the billions of dollars Intelsat and SES would reap from clearing C-band frequencies ahead of deadline.
In the latest twist of a three-year legal saga between the satellite operators that just last week broke off merger talks, a federal appeals court said June 21 that the bankruptcy court had erred in rejecting SES’s claim.
Judge Robert Payne, of the U.S. District Court for the Eastern District of Virginia, has sent the case back to the U.S. Bankruptcy Court for the Eastern District of Virginia.
At the heart of the dispute between SES and Intelsat is a broken agreement to equally share the $9 billion in proceeds they would get for clearing C-band for terrestrial telcos.
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According to Intelsat, this deal was nullified once the Federal Communications Commission opted in 2019 to sell C-band frequencies via a public auction, rather than a satellite operator-led private process.
Bankruptcy Court Judge Keith Phillips sided with Intelsat Sept. 30, prompting SES to appeal after seeking $1.8 billion in compensation to cover damages from the broken agreement.
Payne agreed with SES that the sharing pact should not have been construed as only applying to a privately run spectrum sale.
SES declared the judgment as a “major appellate victory” in its ongoing legal battle against Intelsat.
Intelsat said it disagreed with the appeal judge’s decision but did not believe it would change the ultimate ruling in this case.
“Judge 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,” Intelsat said in a statement.
SES and Intelsat are currently set to get $3.97 billion and $4.9 billion, respectively, in total incentive payments from the FCC if they can move customers and filter ground antennas in time for vacating the lower 300 MHz slice of C-band by Dec. 5.
SES has already launched the five satellites it needs in geostationary orbit for its C-band clearing plan.
Intelsat has one more to go, the Galaxy 37 satellite SpaceX is slated to launch in early August, after deploying six C-band replacements under its strategy.
The costs for all these satellites are being reimbursed by the FCC, which raised more than $80 billion from Verizon, AT&T, T-Mobile, and other telcos from auctioning off the frequencies.