Intelsat S.A., operator of the world’s first Globalized Network and leader in integrated satellite solutions, today announced financial results for the three months ended March 31, 2019.
In the first quarter of 2018, we adopted the provisions of the Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). All financial results presented in our first quarter 2019 quarterly report are presented on a comparable basis to 2018 reported results, unless noted otherwise.
Intelsat reported total revenue of $528.4 million and net loss attributable to Intelsat S.A. of $120.6 million for the three months ended March 31, 2019.
Intelsat reported EBITDA1, or earnings before net interest, gain on early extinguishment of debt, taxes and depreciation and amortization, of $372.8 million and Adjusted EBITDA1 of$380.3 million, or 72 percent of revenue, for the three months ended March 31, 2019. Free cash flow from operations1 was $24.0 million.
Intelsat’s Chief Executive Officer, Stephen Spengler, said, “In the first quarter of 2019, we built momentum on our managed services strategy, which addresses new requirements in the markets we serve. We accelerated our deployment of managed services for enterprise, aeronautical and maritime applications. In the past weeks, we introduced new hybrid services for our media customers that seamlessly integrate satellite services with cloud-based solutions. Each of these managed solutions leverages the global reach of our fleet and addresses our customers’ needs for efficient and flexible connectivity.”
Spengler concluded, “In the past month we increased the transparency and provided more details of the C-Band Alliance proposal under the U.S. Federal Communications Commission C-band proceeding. We are collaborating with a number of the stakeholders in the proceeding, gaining consensus so that we can deliver to the FCC a market-based approach which is clearly recognized as the best path to protecting incumbents, while repurposing spectrum that will accelerate 5G deployment and innovation in the U.S.”
First Quarter 2019 Business Highlights
Intelsat provides critical communications infrastructure to customers in the network services, media and government sectors. Our customers use our services for broadband connectivity to deliver fixed and mobile telecommunications, enterprise, video distribution and fixed and mobile government applications. For additional details regarding the performance of our customer sets, see our Quarterly Commentary, available on our website.
Network services revenue was $204.3 million (or 39 percent of Intelsat’s total revenue) for the three months ended March 31, 2019, an increase of 3 percent compared to the three months ended March 31, 2018. This increase reflects $14.3 million in accelerated revenue associated with hardware supplied and third-party services under a long-term contract subject to Accounting Standards Codification 842, Leases (“ASC 842”).
Media revenue was $226.0 million (or 43 percent of Intelsat’s total revenue) for the three months ended March 31, 2019, a decrease of 6 percent compared to the three months ended March 31, 2018.
Government revenue was $93.2 million (or 17 percent of Intelsat’s total revenue) for the three months ended March 31, 2019, a decrease of 4 percent compared to the three months ended March 31, 2018.
Average Fill Rate
Intelsat’s average fill rate at March 31, 2019 on our approximately 1,750 36 MHz station-kept wide-beam transponders was 78 percent, as compared to an average fill rate at December 31, 2018 of 78 percent on 1,775 transponders. In addition, at March 31, 2019 our fleet included approximately 1,475 36 MHz units of high-throughput Intelsat EpicNG capacity, as compared to 1,150 units at December 31, 2018, reflecting the entry into service of Horizons 3e. Please see Recent Events, below, for more detail regarding transponder trends following the loss of our Intelsat 29e satellite.
Intelsat conducted no satellite launches in the first quarter of 2019. The Horizons 3e satellite, Intelsat’s joint venture satellite with Japan’s leading satellite operator, SKY Perfect JSAT Corporation, entered service in January 2019. Horizons 3e provides over 30 Gbps of incremental throughput to Intelsat’s fleet, completing the initial buildout of the Intelsat EpicNG global high-throughput network with service coverage in the Asia-Pacific region. Intelsat 38, a satellite carrying replacement capacity for direct-to-home platforms serving Central and Eastern Europe as well as the Asia-Pacific region, also entered service in January 2019. For additional details regarding our satellite investment program and 2019 planned satellite launches, see our Quarterly Commentary.
At March 31, 2019, Intelsat’s contracted backlog, representing expected future revenue under existing contracts with customers, was $7.9 billion, as compared to $8.1 billion at December 31, 2018.
C-band Proceeding at the U.S. Federal Communications Commission (“FCC”)
The C-Band Alliance (“CBA”), of which Intelsat is a founding member, submitted two significant filings in response to the Notice of Proposed Rule Making (“NPRM”) issued by the FCC, GN Docket No. 18-122. On April 3, 2019, Intelsat and CBA partner SES filed a customer commitment letter, detailing customer transition commitments from the CBA, including costs to be funded by the CBA, should its proposal for spectrum clearing be adopted by the FCC. On April 9, 2019, the CBA filed its Transition Implementation Plan for safely migrating all current services into a reduced spectrum allocation. For additional details regarding our activities on our proposal to the FCC, see our Quarterly Commentary, available on our website.