High expectations for satellite sector

Aircraft ‘direct-to-seat’ entertainment and connectivity for passengers while travelling, currently represents a very modest 1 per cent of revenues for the major satellite players such as Eutelsat and SES.  A major report from investment banker Exane/BNP-Paribas expects revenues from in-flight connectivity to grow to 15 per cent of group revenues at Eutelsat by 2025, and accelerating rapidly from 2017 onwards.

The bank say that among the 50 or so satellite operators, Eutelsat and SES are the best positioned thanks to their global coverage, technology and recently-signed partnerships.  “Secondly, while inflight connectivity currently only accounts for 1 per cent of group revenues, we expect this contribution to accelerate from 2017 onwards. We estimate that it could account for up to 15 per cent of group revenues by 2025e and should drive 20 to 50 per cent of all the long term growth we currently forecasts for both companies. In other words, it is likely to be a key growth driver for both Eutelsat and SES.”

The report, from satellite analyst Sami Kassab, talks of the aircraft sector moving rapidly from simple Internet connectivity to more sophisticated WiFi-type availability. But first, says Kassab, the airlines – and the satellite operators – have to come up with a workable and attractive business model which is cheap enough to attract more widespread use and yet still allows a profit for all concerned.  “The continued drop in satcom prices, helped by a new generation of satellites, supports this cycle,” says the bank.

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