Quarterly Commentary. Quarterly Total Revenue and Adjusted AEBITDA

Transcription

1 Millins Secnd Quarter 2018 April 1, June 30, 2018 July 31, 2018 Secnd Quarter 2018 Perfrmance Summary In the secnd quarter f 2018 we advanced ur perating pririties and cmpleted capital markets transactins with significant benefits fr ur business. In the secnd quarter, we wn a strategic cntract fr a custm paylad n ur Intelsat 39 satellite fr services in Asia, sld new services and expanded ur distributin netwrk fr ur mbility services, entered int new and renewed cntracts in ur gvernment business and welcmed new bradcasters t ur media neighbrhds. On January 1, 2018, we adpted the prvisins f the Financial Accunting Standards Bard Accunting Standards Cdificatin Tpic 606, Revenue frm Cntracts with Custmers ( ASC 606 ). The mst significant adjustments t ur reprted results were related t cntracts with a significant financing cmpnent, typically with respect t ur lng-term media and gvernment cntracts fr which a prepayment was received, which resulted in an increase in revenue and an increase in interest expense, bth f which are nn-cash. Only a small prtin f ur ttal cntracts required accunting changes as a result f implementing ASC 606. This change further aligns Intelsat with internatinal accunting practices cnsistent with ur peer grup. Quarterly Ttal Revenue and Adjusted AEBITDA $600 $544 $538 $500 $533 $539 $538 $519 $419 $513 $416 $400 $300 $200 $418 $420 $416 $392 $391 Revenue AEBITDA $100 $- 2Q17 3Q17 4Q17 1Q18 2Q18 Ttal revenue was $538 millin in the secnd quarter f 2018, an increase f $4 millin, r 1 percent, as cmpared t the secnd quarter f Ttal revenue excluding the effects f ASC 606 was $513 millin fr the secnd quarter f 2018, a decline f $21 millin, r 4 percent, as cmpared t the secnd quarter f Net lss attributable t Intelsat S.A. was $47 millin fr the secnd quarter f 2018, as cmpared t net lss attributable t Intelsat S.A. f $24 millin in the secnd quarter f Higher interest rate csts were the primary cntributr t the greater lss.

2 Adjusted EBITDA 1, r earnings befre interest, taxes, depreciatin and amrtizatin, f $416 millin, r 77 percent f revenue, decreased frm $418 millin, r 78 percent f revenue, in the secnd quarter f Excluding the effects f ASC 606, Adjusted EBITDA was $391 millin, r 76 percent f revenue, a decrease f $27.4 millin, r 7 percent, as cmpared t the secnd quarter f 2017, primarily reflecting the verall lwer revenue. Factrs reflected in the secnd quarter 2018 t secnd quarter 2017 cmparisn include: reduced vlume frm nn-renewing data services, inclusive f pint-t-pint telecmmunicatins infrastructure services, replaced by higher vlume, but lwer priced services n high-thrughput capacity in certain regins and applicatins and nn-renewals f certain media services. We cntinue t experience grwth in revenue frm cmmercial bradband mbility netwrks. Cntracted backlg at June 30, 2018 was $8.7 billin, inclusive f apprximately $1.1 billin attributable t the effects f ASC 606. Excluding the effects f ASC 606, cntracted backlg at June 30, 2018 was $7.5 billin, representing expected future revenue under existing cntracts with custmers, as cmpared t $7.6 billin at March 31, At apprximately 3.5 times trailing 12 mnths revenue (frm July 1, 2017 t June 30, 2018), ur backlg remains sizable; we believe it prvides a slid fundatin fr predictable cash flw and investment in ur business. Nearly tw-thirds f ur backlg is related t ur lnger-term media cntracts Operatinal Pririties: Drive revenue stability and invest fr grwth, leveraging all assets and advancing ur managed services and technlgy innvatins t expand ur market pprtunities. Our plan includes fur peratinal pririties in 2018 which are designed t prvide a stable fundatin, develping new revenue surces that can prvide grwth in the near- t mid-term. 1. Leverage all assets within the Intelsat glbal netwrk fr maximum return. Further ur mmentum n ur new assets and capture pre-launch cmmitments. Build n ur marketleading neighbrhds, expansive grund netwrk, grwing managed services platfrm and strng cmmercial and gvernment custmer relatinships t capture grwth. Prvide sectr leadership by prtecting and ptimizing ur spectrum rights. The scale f ur fleet and ur glbal ftprint psitins Intelsat t serve the leading wireless, mbility and gvernment users arund the wrld. In the secnd quarter f 2018, Intelsat signed an agreement including a significant increase in vlume frm a previus cmmitment frm the anchr custmer n Intelsat 39, the Myanmar Ministry f Transprtatin and Cmmunicatins ( MOTC ). The Intelsat 39 satellite is planned fr launch in the secnd quarter f 2019, features a specially designed paylad t prvide 3G and 4G infrastructure fr Myanmar, while als prviding grwth capacity at this rbital lcatin fr U.S. gvernment applicatins. Lng-standing custmer, TELE Greenland, extended its relatinship with Intelsat well int the next decade, with services n ur high-thrughput satellite ( HTS ) Intelsat 35e. Satellite cnnectivity is an essential part f the TELE Greenland infrastructure. 2

3 On July 12, 2018, Eurpean satellite peratr, Eutelsat S.A., jined the Intelsat, Intel Crpratin and SES S.A. C-band Jint Use Prpsal presented t the United States Federal Cmmunicatins Cmmissin ( FCC ). Under the prpsal, prtins f the C-band spectrum in the GHz range currently assigned t fixed satellite services peratrs in the United States wuld be made available fr jint use with the wireless sectr thrugh a market-based slutin managed by a satellite sectr-led cnsrtium. A Ntice f Prpsed Rule Making ( NPRM ) was unanimusly apprved by the FCC in a July 12, 2018 Open Meeting. Once entered int the U.S. Federal Recrd, a 60-day cmment perid will begin, t be fllwed by a 30-day reply perid. Our jint prpsal prvides a breakthrugh, market-based slutin t prtect the quality and reliability f the services we prvide t users while accelerating access t spectrum fr 5G deplyments. We believe ur prpsal is well-psitined in the NPRM fr the fllwing reasns: Our prpsal culd be implemented quickly and efficiently, addressing the emphasis fr speed t making spectrum available fr 5G services presented in the NPRM and in the individual cmments f the FCC Cmmissiners. Our prpsal is the nly ne t address a key gal presented in the NPRM, which is t prtect the valuable incumbent services prvided in C-band tday. Our prpsal prvides the reliability and the certainty that we and ur custmers need in rder t cntinue prviding services in the band. We intend t cntinue t wrk cnstructively with the FCC, ur custmers and ther stakehlders. The satellite peratrs will wrk t demnstrate ur ability t efficiently implement ur market-based prpsal, prtecting the C-band services envirnment frm disruptive interference while clearing spectrum t accelerate the era f 5G in the U.S. We believe that it is pssible the FCC may issue its final Reprt and Order in early t mid Hwever, we can prvide n assurance as t the likelihd f the FCC's acceptance f the varius facets f ur prpsal, r the timing f a final ruling, all f which are in the cntrl f the FCC. 2. Scale ur IntelsatOne Flex and ther managed services acrss targeted cmmercial and gvernment pprtunities, including new services fr grwing applicatins and building strategic partnerships t amplify ur marketing effrts. Intelsat General annunced a new managed service platfrm t supply aernautical bradband slutins t the gvernment sectr. IntelsatOne FlexAir is a wrldwide in-flight cnnectivity service designed fr aircraft with high-perfrmance requirements, such as manned and unmanned intelligence, surveillance and recnnaissance ( ISR ) aircraft. The glbal Ku-band platfrm is cmprised f beams n ur high-thrughput Intelsat Epic NG satellites and ur traditinal wide-beam spacecraft. The service is cmpatible with multiple types f fuselage and tail-munted antennas n bth manned and unmanned aircraft. The service allws custmers t use existing Ku-band terminals n aircraft already in service just by adding a mdem. This is far less expensive and time intensive than replacing a previusly installed antenna. The managed service ffers different subscriptin plans and cmmitted infrmatin rates as high as 10 Mbps t the aircraft and 3 Mbps frm the airframe, r even unlimited data allcatins fr use by heads f state and cmmanders. 3

4 In the secnd quarter, Intelsat added maritime technlgy leader, Navarin, as a distributr f IntelsatOne Flex services, building gegraphic and sectr depth, especially with respect t the shipping industry. IntelsatOne Flex equips service prviders with higher thrughput and the ability t create custmized services as cmpared t ther mbility slutins. Building n the first quarter 2018 additin f KDDI Crpratin, which prvides imprtant distributin capability in Asia, Navarin jins a grwing list f IntelsatOne Flex distributrs. 3. Lead the industry in seamless implementatin f satellite-based telecmmunicatins slutins with the glbal telecmmunicatins infrastructure. Invest in and develp innvative terminals and grund hardware, and participate in standards develpment, t realize Intelsat s visin f simplified access and expanded use f satellite slutins. Building upn Intelsat s activity with the 3 rd Generatin Partnership Prject ( 3GPP ) thrugh the Alliance fr Telecmmunicatins Industry Slutins ( ATIS ), Intelsat annunced that it jined the Seamless Air Alliance, a cnsrtium funded by Airbus, Airtel, Delta, OneWeb, and Sprint t usher in a new era f in-flight cnnectivity. The Seamless Air Alliance aims t drive standards develpment that will enable pen innvatin inside the cabin and facilitate a better, mre seamless, inflight cnnectivity experience fr passengers. The ultimate gal f the alliance is t empwer mbile peratrs t extend their services int airline cabins. With satellite serving as the primary means f cnnecting aircraft, Intelsat will cntribute t the integratin f gestatinary and lw-earth rbit satellite slutins int the hybrid netwrk and help define standards, test equipment and develp service packages fcused n the aernautical sectr. 4. Pursue cntinued financial discipline t maximize flexibility during a perid f cntinued business transitin. Intelsat cmpleted imprtant steps in its plan t achieve enhancements in its capital structure, including addressing near-term maturities and reducing cash interest csts. The ttal capital raise f apprximately $633 millin included an issuance f cmmn equity f apprximately $230 millin and a cnvertible debt issuance f apprximately $403 millin aggregate principal amunt by Intelsat S.A. In cncert with the transactins, Intelsat annunced a change in its capital investment guidance and strategy, mving t a less capital intensive plan ver the near- t mid-term (see 2018 Outlk and Guidance, belw). In the mid-term, Intelsat is shifting t an emphasis n sftware-defined satellite designs. Sftware-defined satellites are expected t result in streamlined manufacturing, lwering csts, while using advanced sftware t define the satellite missin nce in rbit. This next generatin f technlgy is nw advancing t include higher-thrughput satellites that will be designed t prvide maximum flexibility, increasing ur ability t respnd t new pprtunities and shifts in the market. Given Intelsat s industry leading cllectin f rbital rights, we believe we are well-psitined t maximize the strategic benefits f this emerging technlgy. 4

5 Millins Intelsat S.A. Business Highlights and Custmer Set Perfrmance All 2018 cmparisns are t 2017 unless nted therwise Netwrk Services Netwrk services revenue was $199 millin in the secnd quarter f 2018, a $16 millin, r $215 $211 $212 8 percent, decrease frm the prir year $200 $199 $199 quarter. There were n significant adjustments attributable t ASC 606. The largest factrs cntributing t the year-ver-year decline were nn-renewals and cntractin f services, the largest f which were pint-t-pint internatinal trunking services and cellular $150 $100 $50 $- backhaul services fr custmers in Latin America, as well as lwer prices n renewing 2Q17 3Q17 4Q17 1Q18 2Q18 wide-beam business. In additin, $4 millin f netwrk services revenues were reclassified t ur gvernment custmer set due t clarificatin f end-use applicatins. These declines were partially ffset by grwth in revenue frm bradband mbility services fr the cmmercial maritime sectr. As cmpared t the first quarter f 2018, netwrk services revenue was stable, with grwth in mbility slutins leveraging the Intelsat Epic NG high-thrughput netwrk ffsetting nn-renewals f pint-t-pint and ther services. Secnd Quarter Netwrk Services Highlights and Business Trends: Netwrk Services Quarterly Revenue Intelsat cntinues t build backlg cmmitments fr ur next generatin Intelsat Epic NG fleet and managed services platfrms, while als bking new business and renewals n ur traditinal satellites. In the secnd quarter f 2018, we cntinued t advance ur gal f supprting, and seamlessly integrating with, wireless netwrk infrastructure. Cntracts in the wireless sectr included: The MOTC f Myanmar bradened its relatinship with Intelsat, using ur satellites t accelerate the deplyment f the cuntry s 3G and 4G wireless cmmunicatins infrastructure in Myanmar. The MOTC will utilize services n Intelsat 39, a Ku-and-C-band satellite which is scheduled t replace Intelsat 902 at 62 E in Under the new lng-term agreement, which significantly increases an earlier cmmitment in terms f vlume and term, Intelsat 39 will hst a custmized paylad which includes C- and Ku-band satellite services ptimized fr the Myanmar requirement. The Gvernment f Myanmar plans t use the cnnectivity t significantly enhance its existing infrastructure, as well as the netwrks f ther mbile peratrs and media cmpanies. Vdacm Internatinal ( Vdacm ) renewed and expanded services supprting its African satellite wireless netwrk. Under the multi-year cmmitment, Vdacm mre than tripled its vlume requirements, including the prting f services t Intelsat 37e. Vdacm is aggressively expanding its rural service territries t capture new grwth and satisfy regulatry requirements. Intelsat prvides Vdacm with a satellite-based slutin that features higher-perfrmance and use f slar pwer t achieve lwer ttal cst f service ecnmics in lw ppulatin density regins. 5

6 TELE Greenland renewed its cmmitment fr services n Intelsat 35e, extending its cmmitment well int the next decade. The services are used by TELE Greenland fr cnnectivity t remte crners f Greenland, supprting wireless and enterprise applicatins. Enterprise netwrks are large private data netwrks that use satellite slutins because f gegraphic reach, efficient bradcast transmissins and reliability. Enterprise cntracts signed in the secnd quarter f 2018 include: A U.S.-based intergvernmental rganizatin renewed a prtfli f services n five Intelsat satellites and added a multi-year cmmitment fr new services n Intelsat 33e. The custmer uses Intelsat services as part f a glbal netwrk supprting security, lgistics and administrative functins, as well as disaster recvery supprt. Telespazi Brasil S.A. ( Telespazi ), a leading prvider f satellite services in Brazil, signed a multi-transpnder agreement fr services n Intelsat 21. Telespazi will use the cnnectivity t sustain its enterprise and institutinal data netwrk business. AT&T Crpratin renewed a prtfli f services acrss the Intelsat Nrth American fleet. Using services n fur Intelsat satellites, the cnnectivity is used t supprt disaster recvery requirements, such as fr private enterprise netwrks and U.S. gvernment applicatins including the First Respnder Netwrk Authrity (FirstNet) netwrk. Mbility services, which prvide bradband cnnectivity t planes and cean vessels, are fast grwing applicatins which use ur wide-beam satellites, Intelsat Epic NG satellites, and IntelsatOne Flex managed services. Mbility cntracts signed in the secnd quarter include: Gg LLC, the glbal leader in prviding bradband cnnectivity slutins and wireless entertainment t the aviatin industry, signed a new agreement with Intelsat fr services n the Intelsat 37e satellite. Gg uses services n a number f Intelsat satellites, including five Intelsat Epic NG satellites, as part f its glbal passenger bradband aernautical netwrk. On a glbal basis, grwth pprtunities fr ur netwrk services business include increased demand fr aernautical and maritime mbility applicatins, and high-thrughput capacity fr fixed and mbile bradband applicatins fr telecmmunicatins prviders and enterprise netwrks. Lnger term, Intelsat s strategy includes building seamless slutins fr the land mbile sectr, including cnnected cars and ther frms f land transprt. 6

7 Millins Intelsat S.A. Media prir year quarter. Excluding $17 millin f $200 $237 $222 revenue attributable t ASC 606, media Media revenue was $234 millin in the secnd quarter f 2018, a $12 millin, r 5 $300 percent increase, when cmpared t the $250 $226 $239 $222 $234 $217 revenue in the secnd quarter declined by $5 millin, r 2 percent, t $217 millin as cmpared t the secnd quarter f This decline reflects revenue frm $150 $100 $50 cash basis custmers and terminatin fees $- in the secnd quarter f 2017 which did nt 2Q17 3Q17 4Q17 1Q18 2Q18 ccur in the current perid, and nnrenewals in Nrth America, Africa, the ASC 606 Middle East and Latin America, partially ffset by new revenues recgnized in the secnd quarter f 2018 frm managed services and fees earned frm third-party satellites. As cmpared t the first quarter f 2018, media revenues decreased by $5 millin, r 2 percent. The decline was primarily due t lwer revenues frm transpnder services in the Africa, Middle East and Nrth America regins as a result f nn-renewals, partially ffset by net grwth in managed vide slutins. The impact f ASC 606 was cnstant between the first and secnd quarters f 2018 and thus is nt a factr in the cmparisn f the tw perids. Secnd Quarter Media Highlights and Business Trends: Media Quarterly Revenue Business activity was driven primarily by renewing cntracts related t Intelsat s media distributin neighbrhds in Nrth America. C-SPAN, the Washingtn, D.C.-based public affairs netwrk, signed a new lng-term cntract fr C-band distributin, IntelsatOne transprt and uplink services and assciated in-rbit prtectin services n Intelsat s Galaxy 14 satellite, ne f the premier vide neighbrhds in Nrth America, reaching mre than 100 millin husehlds in the United States. Galaxy 14 is planned fr replacement by Galaxy 30 in Our next media satellite will be Intelsat 38, which is primarily designed t replace capacity fr an existing Intelsat satellite as well as prvide grwth capacity fr direct-t-hme applicatins fr Central and Eastern Eurpe and Asia. We are respnding t the trends in ur media business by emphasizing the intrductin f new prducts beynd traditinal bradcast services. We als aim t expand the types f services we prvide t ur media custmers, particularly thse wh distribute cntent glbally, where we can leverage ur fleet and ur IntelsatOne terrestrial netwrk. 7

8 Millins Intelsat S.A. Gvernment Sales t gvernment custmers generated revenue f $99 millin in the secnd quarter f 2018, a $13 millin, r 15 percent, increase as cmpared t the prir year quarter. Excluding $8 millin f revenue attributable t ASC 606, gvernment revenue in the secnd quarter increased by $4 millin, r 5 percent, t $90 millin as cmpared t the secnd quarter f The increase in the perid primarily reflects the reclassificatin f $4 millin in revenue frm ur netwrk services business t gvernment. $100 Gvernment Quarterly Revenue $97 $99 $80 $86 $85 $90 $89 $90 $60 $40 $20 $- 2Q17 3Q17 4Q17 1Q18 2Q18 ASC 606 As cmpared t the first quarter f 2018, revenue increased by $1 millin, r 1 percent. The impact f ASC 606 was cnstant between the first and secnd quarters f 2018, and thus is nt a factr in the cmparisn f the tw perids. The slight increase reflects mdest grwth in revenue frm ff-netwrk transpnder services. On-Netwrk revenue represented 62 percent f gvernment services in the secnd quarter f 2018, as cmpared t 65 percent in the secnd quarter f Secnd Quarter Gvernment Highlights and Business Trends: The pace f RFP issuances and subsequent awards fr new prgrams remains mdestly imprved frm 2017 levels. We nte cntinued reliance n LPTA (lwest price, technically acceptable) as the predminant evaluatin criteria fr awards f new transpnder services cntracts. At the clse f the secnd quarter, Intelsat General had successfully retired nearly all f its 2018 renewal risk, thrugh awards f new cntracts fr re-cmpeted business r extensins f current cntracts fr an additinal perid f ne year. This reduces ur expsure t pricing pressure that exists in the current envirnment, depending upn the slutin required and regin served, especially given the increasing reliance by the U.S. gvernment n LPTA evaluatin criteria. Intelsat General s track recrd f strng renewal win rates cntinued in the secnd quarter f Intelsat General renewed ver 1,000 MHz f services, achieving a near perfect renewal rate, with a cmbinatin f n- and ff-netwrk services. In April 2018, a Leids-led team including Intelsat General was awarded a hsted paylad prgram by the U.S. Federal Aviatin Administratin. As previusly disclsed, the paylad supprts aircraft navigatin, and is planned t be integrated n the Intelsat Galaxy 30 satellite which is currently under cnstructin. Over the mid-term, ur strategy t grw ur gvernment business includes the intrductin f several new services based upn ur differentiated capacity, including Intelsat Epic NG high thrughput capabilities, designed t address expected U.S. gvernment demand fr aernautical and grund mbile applicatins This includes the recently annunced IntelsatOne FlexAir managed service detailed abve, which leverages the grwth capacity prvided by ur next generatin Intelsat Epic NG HTS services. 8

9 Fleet and Operatins Update Intelsat s average fill rate n ur apprximately 1,850 statin-kept wide-beam transpnders was 79 percent at June 30, As f June 30, 2018, the HTS Intelsat Epic NG unit cunt was apprximately 1,150 units in service, stable in cmparisn t the Intelsat Epic NG transpnder cunt at March 31, Our tw launches fr 2018, Intelsat 38 and Hrizns 3e, are planned fr launch n a single Arianespace rcket in September Intelsat currently has seven satellites cvered by ur 2018 t 2020 capital expenditure plan, three f which are in the design and manufacturing phase r recently launched. The remaining fur satellites are replacement satellites, fr which manufacturing cntracts have nt yet been signed. In additin, we are wrking n ne custm paylad being built n a third-party satellite and a separate jint venture satellite which d nt require capital expenditures, each nted belw as a Nn-Capex Satellite. Our fleet plan includes the use f missin extensin vehicles, r MEVs, t extend the peratinal life f tw f ur wide-beam satellites, which reduces verall capital expenditures in the near- t mid-term, but will increase perating expenses as each MEV enters service. Our wned satellites, third-party paylads and a jint venture prject currently in the design and manufacturing stages are nted belw. Intelsat Epic NG -class satellites are nted with a small e fllwing the satellite number. Satellite Fllws Orbital Lcatin Launch Prvider Estimated Launch Date Estimated In-Service Date Applicatin Intelsat 39 IS E Arianespace Ariane 5 2Q Q 2019 Bradband Infrastructure Galaxy 30 G E Arianespace Ariane Media, Bradband Nn-Capex Satellite Fllws Orbital Lcatin Launch Prvider Estimated Launch Date Estimated In-Service Date Applicatin Intelsat 38 IS-904, G E Arianespace Ariane 5 Sept Q 2019 Media, Bradband Hrizns 3e IS E Arianespace Ariane 5 Sept Q 2019 Bradband Infrastructure 9

10 Cash Flws During the secnd quarter f 2018, net cash prvided by perating activities was $57 millin. Cash paid fr interest was $299 millin, f which $7 millin was capitalized. Under ur existing debt agreements, Intelsat makes significantly greater interest payments in the secnd and furth quarters as cmpared t the first and third quarters f the year. Capital expenditures were $52 millin, resulting in free cash flw frm peratins 1 f $5 millin fr the secnd quarter f Our ending cash balance at June 30, 2018 was $444 millin. Capital Markets and Debt Transactins On May 2, 2018, pursuant t a previusly issued ntice f redemptin, Intelsat (Luxemburg) S.A. ( Intelsat Luxemburg ) redeemed $46.0 millin aggregate principal amunt f its 6 ¾% Senir Ntes due 2018 and in June 2018 repaid the remaining utstanding principal at maturity, retiring this issue in its entirety. On June 14, 2018, Intelsat S.A. cmpleted an ffering f 15,498,652 cmmn shares, nminal value $0.01 per share (the Cmmn Shares ), at a public ffering price f $14.84 per cmmn share, with ttal grss prceeds f apprximately $230 millin. In additin, n June 18, 2018, Intelsat S.A. cmpleted an ffering f apprximately $403 millin aggregate principal amunt f its newly issued 4.5% Cnvertible Senir Ntes due 2025 (the 2025 Cnvertible Ntes ). These ntes are guaranteed by a direct subsidiary f Intelsat Luxemburg, Intelsat Envisin Hldings LLC ( Intelsat Envisin ). The net prceeds frm the Cmmn Shares ffering and 2025 Cnvertible Ntes ffering were used t repurchase apprximately $600 millin principal amunt f Intelsat Luxemburg s 7.75% Senir Ntes due 2021 in privately negtiated transactins with individual hlders in June We intend t use any remaining prceeds fr further debt repurchases and general crprate purpses. The repurchased Intelsat Luxemburg 7.75% Senir Ntes due 2021 remain utstanding and are currently held by Intelsat Envisin. Intelsat Envisin currently intends t use the interest received n these ntes in part t fund the interest payments required under the Intelsat S.A Cnvertible Ntes, as well as t build cash t fund principal at maturity n the remaining utstanding Intelsat Luxemburg 7.75% Senir Ntes due This transactin puts int place a structure similar t that implemented in early 2017 t address the repayment f Intelsat Luxemburg s 6.75% Senir Ntes due 2018 at maturity, discussed abve. Our successful June 2018 transactins prvide a path t further enhance ur capital structure thrugh nging capital markets activities. We appreciate the cntinued supprt f the investment cmmunity as we further execute n this 2018 perating pririty. 10

11 2018 Outlk & Guidance Intelsat reaffirmed its 2018 revenue and Adjusted EBITDA guidance issued n February 26, Intelsat reaffirmed the capital expenditure guidance updated n June 11, Intelsat intrduced cash tax guidance fr 2018 and a mdeling assumptin range fr future perids. We expect the fllwing results, excluding the effects f ASC 606: Revenue Guidance: We expect full-year 2018 revenue in a range f $2.060 billin t $2.110 billin. Adjusted EBITDA Guidance: Intelsat frecasts Adjusted EBITDA perfrmance fr the full-year 2018 t be in a range f $1.560 billin t $1.605 billin. Capital Expenditure Guidance: Over the next three years we are in a cycle f lwer required investment, due t timing f replacement satellites and smaller satellites being built. We are cmmitted t ur 2018 perating pririty t incrprate new innvatins int ur fleet develpment prgram. The new initiatives are planned t allw us t achieve a lwer cst-per-bit fr ur glbal fleet while als attaining lwer verall capital intensity t supprt peratins. Innvatins will cntribute t cmmercial flexibility and strng cmpetitive psitining and include: driving develpment f cmmercially-scaled sftware-definable satellites; leveraging new manufacturing practices; use f missin extensin vehicles; and increased use f reusable rcket launchers. See 2018 Operatinal Pririties: Pursue cntinued financial discipline abve. We expect the fllwing capital expenditure ranges: 2018: $300 millin t $350 millin; 2019: $325 millin t $400 millin; and 2020: $300 millin t $400 millin. Our capital expenditure guidance includes capitalized interest. Capitalized interest is expected t average apprximately $40 millin annually during the guidance perid. In adjusting ur capital expenditure guidance dwnward n June 11, 2018, Intelsat incrprated tw primary changes: the deferral f a new satellite rder frm 2018 t 2019, and a reductin in assumed launch csts related t peratinal and supply imprvements in the launch sectr. By early 2019, we plan t have cmpleted the investment prgram in the current series f Intelsat Epic NG HTS and paylads, thereby increasing ur ttal transmissin capacity. By the cnclusin f the guidance perid at the end f 2020, the net number f transpnder equivalents is expected t increase by a cmpund annual grwth rate ( CAGR ) f apprximately 5 percent, reflecting the net activity f satellites entering and leaving service during the guidance perid. Capital expenditure incurrence is subject t the timing f achievement f cntract, satellite manufacturing, launch and ther milestnes. 11

12 Cash Taxes: We expect cash taxes in 2018 t be apprximately $55 millin t $65 millin. In future perids, we expect cash taxes t range frm $30 millin t $40 millin annually. Stephen Spengler, Chief Executive Officer, Intelsat S.A. Jacques Kerrest, Executive Vice President and Chief Financial Officer, Intelsat S.A. 1 In this quarterly cmmentary, financial measures are presented bth in accrdance with U.S. GAAP and als n a nn-u.s. GAAP basis. EBITDA, Adjusted EBITDA ( AEBITDA ), free cash flw frm (used in) peratins and related margins included in this cmmentary are nn-u.s. GAAP financial measures. Please see the cnslidated financial infrmatin fund in ur earnings release and available n ur website fr infrmatin recnciling nn-u.s. GAAP financial measures t cmparable U.S. GAAP financial measures. Safe Harbr Statement Sme f the infrmatin and statements cntained in this quarterly cmmentary and certain ral statements made frm time t time by representatives f Intelsat cnstitute "frward-lking statements" that d nt directly r exclusively relate t histrical facts. When used in this earnings release, the wrds may, will, might, shuld, expect, plan, anticipate, prject, believe, estimate, predict, intend, ptential, utlk, and cntinue, and the negative f these terms, and ther similar expressins are intended t identify frward-lking statements and infrmatin. Frward-lking statements include: statements regarding ur guidance regarding ur expectatin that the launches f ur satellites in the future will psitin us fr grwth; ur plans fr satellite launches in the near t mid-term; ur intentin t maximize the value f ur spectrum rights, including the pursuit f partnerships t ptimize new satellite business cases and the explratin f jint use f certain spectrum with the wireless sectr in certain gegraphies; ur expectatins as t the ptential timing f a final FCC ruling with respect t ur C-band Jint Use Prpsal; guidance regarding ur expectatins fr ur revenue perfrmance and Adjusted EBITDA perfrmance; ur capital expenditure guidance ver the next several years; ur belief that the scale f ur fleet can reduce the financial impact f satellite r launch failures and prtect against service interruptins; ur belief that the diversity f ur revenue and custmer base allw us t recgnize trends acrss regins and capture new grwth pprtunities; ur expectatin that develping differentiated services and investing in new technlgy will allw us t unlck essential pprtunities; ur expectatins as t the increased number f transpnder equivalents n ur fleet ver the next several years; and ur expectatins as t the level f ur cash tax payments in the future. The frward-lking statements reflect Intelsat's intentins, plans, expectatins, anticipatins, prjectins, estimatins, predictins, utlk, assumptins and beliefs abut future events and are subject t risks, uncertainties and ther factrs, many f which are utside f Intelsat's cntrl. Imprtant factrs that culd cause actual results t differ materially frm the expectatins expressed r implied in the frward-lking statements include knwn and unknwn risks. Sme f the factrs that culd cause actual results t differ frm histrical results r thse anticipated r predicted by these frward-lking statements include: risks assciated with perating ur in-rbit satellites; satellite anmalies, launch failures, satellite launch and cnstructin delays and in-rbit failures r reduced perfrmance; ptential changes in the number f cmpanies ffering cmmercial satellite launch services and the number f cmmercial satellite launch pprtunities available in any given time perid that culd impact ur ability t timely schedule future launches and the prices we pay fr such launches; ur ability t btain new satellite insurance plicies with financially viable insurance carriers n cmmercially reasnable terms r at all, as well as the ability f ur insurance carriers t fulfill their bligatins; pssible future lsses n satellites that are nt adequately cvered by insurance; U.S. and ther gvernment regulatin; changes in ur cntracted backlg r expected cntracted backlg fr future services; pricing pressure and vercapacity in the markets in which we cmpete; ur ability t access capital markets fr debt r equity; the cmpetitive envirnment in which we perate; custmer defaults n their bligatins t us; ur internatinal peratins and ther uncertainties assciated with ding business internatinally; and litigatin. Knwn risks include, amng thers, the risks described in Intelsat s Annual Reprt n Frm 20-F fr the year ended December 31, 2017, and its ther filings with the U.S. Securities and Exchange Cmmissin, the plitical, ecnmic and legal cnditins in the markets we are targeting fr cmmunicatins services r in which we perate, and ther risks and uncertainties inherent in the telecmmunicatins business in general and the satellite cmmunicatins business in particular. Because actual results culd differ materially frm Intelsat's intentins, plans, expectatins, anticipatins, prjectins, estimatins, predictins, utlk, assumptins and beliefs abut the future, yu are urged t view all frward-lking statements with cautin. Intelsat des nt undertake any bligatin t update r revise any frwardlking statements, whether as a result f new infrmatin, future events r therwise. Cntact Dianne VanBeber Vice President, Investr Relatins dianne.vanbeber@intelsat.cm