Advanced Television

Satellite business model stays “strong”

April 16, 2014

A report to clients from analysts at Berenberg Bank, and based on a special satellite conference hosted by the bank last week, says that senior members of the management team from Eutelsat, SES and Inmarsat attended, as well as industry experts from MTM London and Northern Sky Research.

Senior analyst Sarah Simon says that from the perspective of broadcast video (Eutelsat and SES’s core business) the business model remains “extremely robust” in the short to medium term, and with the growth towards HDTV driving further growth in mature markets. “Ultra HDTV is likely to emerge as a medium- to long-term driver of capacity demand and offsetting the potential migration of small channels to IP-based distribution.”

Berenberg advises clients to ‘Hold’ Eutelsat shares, as the company sees an acceleration in its growth rate from the second half of this calendar year (and 1H of Eutelsat’s new financial year which begins in July). However, the bank advises clients to ‘Buy’ SES stock on the basis that the company continues to push further into expanding markets with a particular focus on video, and there also being further merger and acquisition possibilities as well as the potential to return cash to shareholders in the near term.

Both Eutelsat and SES are “positive” on the prospects for Ultra-HDTV, although Eutelsat is not anticipating any commercial UHD launches before 2015-2016. SES also sees 2016 as being the date when commercial UHD launches take place, but with a more meaningful impact by the end of this decade.

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