Concerns over SES progress

Last Friday’s results from Luxembourg-based satellite operator SES have now been digested by the market, and one investment bank didn’t much care for what they saw.

Morgan Stanley, in a note to clients, welcomed SES’s guidance that this year should drive revenues up 6-7 per cent but then said that they were expecting more! The bank gives its reasons, saying that last year saw transponder fill rates of 74 per cent (“the lowest figure recorded in a decade”) while admitting that if new satellites are launched then these will impact the fill rate.

“However, we note that SES commercialised a net 32 incremental transponders only in 2013 vs. 2012,” stated the bank. “We estimate the contract with Brazilian Pay TV operator Oi represents c.30-35 transponders [contract] alone. This suggests the rest of the business is seeing some pluses and minuses, and that the ramp-up of a number of satellites launched in previous years is very slow.”

But the bank also echoes SES’s CEO Romain Bausch’s anticipation of further Merger or Acquisition business this year. Morgan Stanley says: “We do not believe cash returns are imminent and believe management may be interested in pursuing external growth opportunities, which could potential delay cash returns substantially.”

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