Eutelsat is bank’s top tip
October 3, 2012
Investment bank Credit Suisse, in a note for investors, says that it remains positive on the long-term outlook for the satellite industry, and says it favours Paris-based Eutelsat as its “top pick” amongst operators. However, it also used its report to upgrade its rating on Luxembourg’s SES, from ‘Neutral’ to ‘Outperform’. The report also says that Ultra-HDTV demand, in terms of transponder capacity, will start making its move in 2014-15.
Indeed, Credit Suisse’s report looks at satellite’s future in a very positive fashion, saying that even though there are “a lot of satellites scheduled for launch in 2012 (estimated) and 2013 (estimated), increasing available capacity in Extended Europe by 9.5 per cent and 12.1 per cent respectively, on our estimates. Incremental supply is set to materially outstrip incremental demand over the period, however this is a temporary peak in satellite launches and incremental demand should again outstrip incremental supply in 2014(e).”
The bank says that 48 satellites are due for launch over the next two years (to a region they describe as ‘Extended Europe’). These include craft from India and China, and some of the overall plans include replacement satellites for aging craft.
The report forecasts a steady rise in demand despite this growth in capacity reaching around 90 per cent by 2017. Moreover, Eutelsat – says the bank – “is not seeing price pressure in the government segment; the drop in revenues [following] the contract renegotiation in Feb/March has been driven by lower volumes (less transponders needed) while there was no pressure on pricing. However, we see a risk that even though the remaining government capacity was priced at previous levels, the excess capacity could drive price reductions in the commercial segment in the region.
The bank’s study says that its forecast for ‘Extended Europe’ sees growth from today’s 1583 transponders in place to 2217 transponders by 2017.