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SES says Intelsat pulled plug on partnership in 3 a.m CEO call

David Shepardson
·2 min read

By David Shepardson

WASHINGTON, Dec 4 (Reuters) - Two of the largest satellite companies are fighting in U.S. bankruptcy court over incentive payments to clear spectrum for next 5G wireless use.

Satellite company SES SA claims rival Intelsat SA breached a 2018 agreement to work together as part of a Federal Communications Commission (FCC) plan to free up key C-Band satellite spectrum for use by wireless carriers.

SES said in a court filing that Intelsat had agreed to split incentive payments designed to speed up spectrum clearing 50-50 but changed its mind after the FCC in February allocated Intelsat $4.9 billion and SES $4 billion.

SES's filing Friday recounted a Feb. 5 celebratory dinner at an upscale steak and seafood restaurant in northern Virgina between both chief executives after a call with a senior FCC attorney in which Intelsat confirmed it would split the proceeds 50-50. The FCC declined comment.

A few days after the dinner "and at approximately 3 a.m. EST, (Intelsat CEO Stephen) Spengler called SES’s CEO, Steve Collar, and said he had 'a problem,'" SES's filing said.

Spengler told Collar Intelsat believed the agreement had been disbanded three months earlier, when the FCC decided to proceed with a public auction rather by a private sale, SES's filing said.

"During his call with Mr. Collar, Mr. Spengler was contrite and rightly so," the filing said. "Mr. Collar was shocked."

"This case is about corporate desperation, greed, and dishonesty," the SES court filing said. "Saddled with crippling debt and facing bankruptcy, Intelsat betrayed its faithful contractual partner in a brazen attempt to steal approximately $450 million."

Intelsat declined to comment Friday, but said in prior court filings SES's claim is "based on meritless theories of breach of contract, breach of fiduciary duty, and unjust enrichment."

It calls the $1.8 billion sought "flat-out absurd."

Intelsat filed for bankruptcy protection in May in Virginia; a judge scheduled a two-week trial on SES's claims for June 28, 2021.

Intelsat argued that SES "does not need even close to the amount of time it seeks, but believes that delaying a trial will improve its leverage in plan negotiations".

Both companies are based in Luxembourg.

The C-band is a block of spectrum used to deliver video and radio programming to 120 million U.S. households.

The auction is set to begin next week. An SES spokeswoman said Friday its claim "will not impact SES's ability to complete the C-band clearing according to the FCC's accelerated time lines." (Reporting by David Shepardson; editing by Philippa Fletcher)