SES disappoints market

Luxembourg satellite operator SES’s message last week to be patient and wait for three delayed satellites to launch did not go down well with the market. Formally, SES reduced its guidance for this financial year but left its three-year guidance unchanged. Investment banker Morgan Stanley in a note to clients said this “looks ambitious” and “will be difficult to achieve”.

There are upsides in the bank’s report. Recurring growth from its core video business is doing well, and 2014 is expected to be a strong year, given the launch delays will by then have caught up. HD+ is also doing well in Europe, while utilisation rates in Europe improved marginally.

SES, says the bank, is also facing threats from the growing number of ‘high throughput satellites’ (HTS) from the likes of Eutelsat (which releases its financial results on July 30th) and Intelsat.

SES, of course, has its own investment in O3b which is its version of a fleet of HTS satellites. The bank says: “SES thinks O3b will complement SES’s current offer, which we generally agree with. However, it expects other HTS technology to service VSAT, consumer broadband and mobile backhaul, most of which are the core markets of the FSS (and of SES) data business (c.30 per cent of sales). SES thinks traditional Ku-band  technology will retain competitive advantage in the point-to-multipoint markets and not be altogether outcompeted by HTS. Risks remain, we think.”

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