Cuts to US space programmes that could be ushered in after the Republican party takes charge of Congress next year could adversely affect Intelsat’s revenue growth, CEO David McGlade has warned.
Speaking to investors after unveiling Q3 2010 results on 2…
Cuts to US space programmes that could be ushered in after the Republican party takes charge of Congress next year could adversely affect Intelsat’s revenue growth, CEO David McGlade has warned.
Speaking to investors after unveiling Q3 2010 results on 2 November, McGlade said: “We see risk in opportunity. In some cases there could potentially be cuts to programmes that could adversely affect us.”
Republicans have been highly critical of government spending across the US economy, and after regaining the House of Representatives in November’s mid-term elections the party will have the political influence to scale back the Obama administration’s space programmes.
However, McGlade said that overall the satellite operator could benefit from a more austere environment, adding that “many of the government’s programmes are extremely expensive, they’re plagued by cost overruns and delays – so we believe we’ll be in a good position to have cost-effective solutions to augment government-owned programmes”.
Intelsat also told investors that the company planned to continue efforts to simplify its capital structure, following a debt buy-back earlier this year.
The group raised US$1bn in September through the issue of 10-year senior notes to buy back approximately US$783m of senior debt. At the time, Intelsat said the remaining proceeds will be used for general corporate purposes, potentially including the repayment or redemption of the company’s other debt.
Although Intelsat’s debt structure is predominantly made up of bonds, it also has more than US$3bn in bank loans, which could be diversified further by tapping export credit agencies.
CFO and EVP Michael McDonnell, also taking questions following the Q3 2010 announcement, confirmed: “We obviously have said publicly that we’re committed to working to simplify our capital structure over a period of time, and utilising the secured capacity and the transaction that we did back in September are all part of that initiative.”
Its EBITDA for the three months to 30 September, 2010, was US$478.1m, compared with US$439.8m for the corresponding period last year. Total revenue for Q3 2010 increased 4% to US$644.3m, compared with Q3 2009. However, the satellite operator’s net loss widened to US$107.35m in Q3 2010 compared with US$94.78m in 2009.
