Mike Arnold
Long only, small-cap, tech, growth at reasonable price

Intelsat Continues To Deleverage

Intelsat (NYSE:I) is a highly levered fixed satellite services ("FSS") company with extremely high operating leverage and a stable, recurring revenue model.

Shares of the FSS company haven't moved much since they IPO'ed in April 2013. I posited in a previous article that Intelsat's high degree of operating and financial leverage, coincident with stable, recurring cash flows should allow it to retire significant debt (and interest costs), allowing value to accrue to the equity.

The thesis regarding deleveraging has generally played out so far, however the market has yet to recognize the additional enterprise value stub that should be applied to the equity.

Today, Intelsat is valued at ~$2.3 billion (common and preferred) and the company is encumbered...

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