Hedge fund Kerrisdale Capital, which is well-known for its short selling, took the other side of the trade and disclosed two new long positions on Wednesday.
Kerrisdale has generally been bearish on over-hyped spectrum plays in recent years, but the firm said Intelsat and SES are exceptions.
“Intelsat and SES hold the keys to the right frequencies, in the right way, at the right time, without the irreconcilable interference issues that have beset other spectrum stories,” Kerrisdale wrote.
C-Band Is Key
The firm estimates the two companies have roughly $60 billion in asset value, making Intelsat stock worth $151 per share and SES stock worth $59 per share.
Kerrisdale said the key to the sky-high valuations is the company’s C-band, a set of frequencies that include the 3.7-4.2 GHz range, a key range for 5G networks.
“With an ideal mix of ample bandwidth, good coverage (especially using the 5G technology known as massive MIMO), and international harmonization, the C band has been described as the spectral ‘sweet spot’ for widespread 5G deployment,” Kerrisdale wrote.
The firm estimates U.S. C-band is worth at least $0.50/MHz-pop, and Intelsat and SES will likely do everything in their power to free up and monetize as much of it as possible over the next decade.
Kerrisdale says SES and Intelsat plan to effectively auction off their C-band to mobile carriers, and the firm believes the FCC would likely fully support this type of free-market distribution.
The market certainly seems to be taking Kerrisdale’s thesis to heart. Intelsat stock was up 10 percent on Wednesday morning, and SES shares were up 3 percent.
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