What happened

Intelsat (NYSE:I) stock is off to the races -- yes, again. Shares of the heavily indebted satellite communications company closed 12.1% higher on Wednesday, capping a five-day, 19% run-up that began late last week when mergers and acquisitions (M&A) news site CTFN.com reported that Intelsat was rumored to be "actively exploring possibilities for divestments and other alternatives."

So what

Is there anything to these rumors that could justify the run-up? It's impossible to say -- which may be why no credible media source has confirmed the rumors or said anything more about Intelsat's supposed M&A plans since the rumor first surfaced last week.

Instead, the closest we've come to that was a column in the Financial Times accusing overheated Intelsat stock traders of entertaining "egregious expectations" about the value of their stock.

Satellite beaming down to Earth.

Intelsat traders received a mysterious transmission last week, and the stock's gone nowhere but up since. Image source: Getty Images.

Now what

Now, that's not to say that optimism over Intelsat is entirely without merit. As I've noted already, management laid out in its latest earnings report a very modest capital spending plan for fiscal 2018 and beyond. If Intelsat sticks to it, and if the company generates cash flow on par with what it's achieved (on average) over the past five years, then Intelsat could very well generate upwards of $1 billion in positive free cash flow over the next three years -- enough money to help the company begin paying down its sizable debt load.

Even if the merger rumors prove unfounded, Intelsat may not need a merger to survive, and thrive.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.