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SES: “On Target” profits up 26.8%

February 17, 2012

By Chris Forrester

Luxembourg-based satellite operator SES reported record profits for its full year 2011 numbers (to December 31st) as well as continued growth in its fleet (which now numbers 50 satellites) helped by this past week’s launch of SES-4. However, overall launch delays of new satellites plus some problems with specific satellites harmed, and continue to harm, revenues.

CEO Romain Bausch suggested to analysts that they look beyond this year’s figures to the longer-term and underlying growth. “This is a transition year,” he explained.

Not helping is that this year is the year when SES Astra’s German analogue transmissions end, with the consequential loss of those revenues. Meanwhile, SES is reaching record numbers of European homes. Analogue switch-off takes place in April, and only a couple of million homes are still watching in analogue (on satellite). 2.5 million HD+ receivers have been sold into the German market, and SES now has more than 400,000 users paying its €50 “technical fee” for HD signals, and Astra expects this number to grow to more than 1 million by the end of 2012.

Nevertheless, Bausch reported that of last year’s launches, QuetzSat-1 was fully contracted, SES-2 and SES-3 were working well in their North American role, and Astra 1N had successfully added 16 valuable transponders from 28.2 degrees East location. YahSat’s YahLive payload also came into use in Q4. Bausch said that SES-5’s launch date had also slipped because of the knock-on delays on the Proton launch rocket, and impacting anticipated revenues.

The downside news on satellite problems was that a failure of certain solar array circuits on AMC-15 had caused problems for client EchoStar, and meant a reduction of €5 million in annual revenues. In January 2012, there was another solar array problem on AMC-16 which triggered a similar loss in income.

The problem for SES is that it has a fleet which contains 11 Lockheed Martin A2100 satellites “which are susceptible to solar array power generation anomalies”. Besides the problems with AMC-15 and AMC-16, there are also problems on AMC-6, and twelve C-band transponders have been switched off as a result. The worry, although unstated, is that these problems could continue.

SES’s financial highlights are that revenues are growing at about three percent and that group profit is up an impressive 26.8 per cent (to €617.7 million). Fleet utilisation stood at 81.2 per cent at the end of 2011. Between now and Q1/2014, the SES fleet capacity will grow by 19 per cent. Revenues were flat (down 0.1 per cent) at €1.733 billion, with EBITDA also falling back slightly (-1.7 percent) at €1.274 billion. Operating profit grew 1.4 per cent to €808.2 million, while Group Profit rose 26.8 per cent to €617 million.

New DTH platforms have been launched in Georgia, Serbia and East Africa, while the whole of SES’s available capacity over India has been contracted. A new satellite, SES-8, is being built to serve increased demand over India. SES has also signed a strategic partnership with Russia’s Gazprom.

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