Europe's Eutelsat, SES set for $6 billion in U.S. spectrum-clearing payments

By Leo Marchandon

July 27 (Reuters) - ‌European satellite ​operators SES ​and Eutelsat stand to receive roughly $6.1 billion in combined payments for helping clear satellite spectrum for U.S. wireless ‌services, they said on Monday, sending their shares higher.

SES ⁠shares were up 6.6% while Eutelsat gained 5.7% as of 0720 GMT, as ‌investors welcomed the prospect of ‌substantial incentive payments tied to freeing spectrum for U.S. next-generation wireless services.

The Federal Communications Commission's order allocates a total $6.3 billion ​of incentive payments among satellite operators, with SES set to receive 89%, Eutelsat 8% and Canada's Telesat 3%. The FCC ⁠aims to make 160 megahertz of upper C-band spectrum available for mobile operators, with an ​auction scheduled to begin on April 27, 2027.

Satellite companies must complete the main spectrum transition by December 2030 ​to receive $4.9 billion of the incentives, ‌with a final deadline in June 2031 linked to a further $1.4 billion. They will also be reimbursed ⁠for eligible transition costs, which the FCC estimates at $4 billion to $5 billion.

The net present value of the incentive payments equates to around €6 per SES ⁠share, versus less than €0.5 per Eutelsat share, JPMorgan analysts said in a note ​to investors.

JPMorgan also noted that SES's gross $5.6 billion payment could be reduced by taxes and obligations to Intelsat bondholders, who are entitled to 42.5% of ‌proceeds, or about $1.1 billion, from the first 100 megahertz of cleared spectrum.

For European telecom investors, the decision ‌also indicates the scale of upcoming spectrum spending for U.S. operators. ⁠JPMorgan said the coming 2027-2028 ‌auctions could require around $25 ​billion of spending, potentially challenging expectations for future share buybacks.

(Reporting by Leo Marchandon in Gdansk, editing by ‌Milla Nissi-Prussak)

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