What happened
Shares of Intelsat S.A. (NYSE: I) stock gained 17% in July, according to data provided by S&P Global Market Intelligence . The satellite communications company continued to gain ground on expectations that it will play a key role in providing spectrum for 5G wireless services.
Shares popped following news that the FCC had voted to approve opening the 3.7 GHz to 4.2 GHz range of the C-band wireless spectrum for commercial terrestrial use. Intelsat had partnered with Eutelsat to promote the adoption of Intelsat's proposal to open the wireless range.
So what
Intelsat stock has skyrocketed since February. That's when the company mentioned in its first-quarterearnings callthat the Federal Communications Commission seemed to be receptive to a proposal to expand the legally permitted range of the C-band wireless spectrum. Here's a section from the FCC's proposal, which was ultimately unanimously approved:
Intelsat also published a press release on July 12 announcing that Eutelsat had signed on to support its C-band proposal.
Now what
Intelsat released second-quarter earnings results and held a conference call after the market closed on July 31. Shares gained substantially during the next trading day and are up 26% in August so far.
Sales for the second quarter came in at $537.7 million, which is up less then 1% year over year, but beat the Zacks Investment Research average analyst estimate of $533.2 million. Losses per share increased to $0.38 -- up from a loss of $0.20 per share in the prior year quarter but significantly better than the $0.54 per-share loss called for by the average analyst estimate as aggregated by Zacks.
Opening the C-band spectrum for use by mobile 5G networks will likely create major new revenue sources for Intelsat. Whether this new business will be enough to justify the stock's massive gains this year remains to be seen, but it looks like investors betting on the FCC expanding the C-band spectrum made the right move.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
