WASHINGTON, Feb 5 (Reuters) - Intelsat SA shares fell 6% on Wednesday on a report the company may file for Chapter 11 bankruptcy protection if U.S. regulators do not boost compensation for shifting to new spectrum, a move that could potentially delay freeing up spectrum for next generation 5G wireless use.
On Thursday, Federal Communications Commission Chairman Ajit Pai is set to announce how much money he will propose satellite companies receive for giving up existing spectrum licenses that would be assigned to 5G use as part of a spectrum auction.
Bloomberg reported on Wednesday that Intelsat is considering a possible Chapter 11 bankruptcy filing if the FCC does not boost its compensation for moving within the spectrum band.
Intelsat, whose shares fell as much as 22% on the Bloomberg report, closed down 6.3% at $3.72. A spokeswoman for Intelsat declined to comment on the Bloomberg report, saying the company does not address rumors.
A person briefed on the matter told Reuters a bankruptcy filing could delay the FCC’s efforts to shift the spectrum.
Reuters reported last week that Pai could endorse “low single-digit billion-dollar” incentive payments to existing satellite users - like Intelsat - in addition to the costs of moving the users, citing a person briefed on the matter.
The C-Band is a block of spectrum used by satellite company customers to deliver video and radio programming to 120 million U.S. households. It is seen as the most likely short-term source of available spectrum for next-generation 5G use.
FCC officials briefed congressional staff that the commission believes it could cost about $4 billion to $5 billion to relocate satellite firms and is also considering proposing “low-single-digit billions” incentive payments to speed the transition.
Another satellite company, Eutelsat SA, proposed up to $7 billion in transition funds to “quickly” make spectrum available for 5G, including $4.5 billion in relocation costs.
The FCC is considering funding transition and incentive payments with a surcharge paid by winners of an auction of 280 megahertz of the C-Band, Reuters reported.
Experts believe the C-Band spectrum can be divided to maintain existing service and deliver additional 5G service.
The FCC aims to launch the auction by year-end.
Major satellite service providers including Intelsat, Telesat and SES SA, which form the C-Band Alliance, said last month they were seeking “fair compensation” to quickly clear the spectrum. They argue that without their cooperation, “this critical 5G spectrum will not be made available for at least 10 years.” (Reporting by David Shepardson in Washington Editing by Matthew Lewis)