Intelsat Nets US$ 87.8-M in 3Q, Warns of Lower Revenues Ahead
Washington, D.C., November 1, 2013 — Intelsat S.A. reported on revenues of US$ 651.8 million and net income of $87.8 million, or $0.75 per share, for the three months ended September 30, 2013. But the company admitted that its Q3 revenues was badly hit by the slowdown in military and other US Defense Department spending on satellite bandwidth, and warned of even lower revenues ahead from cuts in U.S. government spending.
Typically, Intelsat generates around 19 percent of its annual revenues from sales to government agencies and the military.
“Despite the solid performance, we are managing through two trends affecting our revenue growth and our operating expense profile,” said Intelsat CEO Dave McGlade.
“These include revenue declines due to on-going effects of the U.S. government reduced spending and budget sequestration. It also includes the impact of fiber deployments and the oversupply environment in Africa, which affects our network services business.”
The company reported EBITDA, or earnings before net interest, taxes and depreciation and amortization, of $493.6 million, and Adjusted EBITDA of $508.4 million, or 78 percent of revenue, during the third quarter.
But McGlade remained optimistic saying while the sharp reduction in government spending will continue to influence near-term results, Intelsat’s long-term outlook remains positive as the company executes two-phase strategy to deliver returns to equity investors.
He said the entry into service of its new Intelsat Epic satellites beginning in 2016 will support the growth plans for existing and future customers. Intelsat said it now has a strong backlog of $10.3 billion, which provides visibility into revenue and cash flow, and stability to its business.
Intelsat's network services business, which provides broadband infrastructure for fixed and wireless telecommunications and enterprise and mobility applications, accounted for 46 percent of Intelsat's total third quarter 2013 revenue, and at $299.9 million, increased one percent as compared to the third quarter 2012. In the third quarter 2013, growth in transponder and managed services revenue for mobility, enterprise, and wireless telecommunications backhaul applications was offset by reduced revenue from channel services, which has been declining due to migration to fiber.
Intelsat's media business, which provides satellite capacity and terrestrial services for the transmission of entertainment, news, sports and educational programming for approximately 300 broadcasters, content providers and direct-to-home platform operators worldwide, accounted for 34 percent of our revenue for the quarter. Revenue of $221.8 million increased four percent compared to the third quarter of 2012, as service volume increased for DTH and cable and broadcast program distribution applications.
Intelsat's government business, which provides highly customized, secure commercial satellite-based solutions to value-added service providers, government and military customers, accounted for 19 percent of revenue. Third quarter revenue of $121.7 million decreased ten percent as compared to third quarter 2012 results, with the majority of the decline in lower-margin off-network revenue.
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