SES held its annual ‘Capital Markets Day’ on June 21st, talking to analysts about the company’s current state of business and prospects for the future. Evidently it went reasonably well.
One equity analyst from investment bank Jefferies followed up the meeting with a ‘BUY’ note to investors. Giles Thorne said SES was “wrestling back the Data narrative”. He added that since the Eutelsat profit warning, rightly or wrongly, the market has had only fear and loathing for data business. “SES did not waste the opportunity to wrestle back the narrative and put its firm take on how to win in a changing industry. Of a far more steadfast nature, we welcome the new guidance for a further 20 per cent of normalised capex reductions over the 2018-22 period.”
He said SES CEO Karim Sabbagh took the occasion to reiterate key strategic themes for SES – an existential emphasis on driving differentiation through a scalable and global satellite-enabled network. “Conviction remains high that the industry has yet to reach its full potential. In his view, the HTS debate has focused far too much on the cheaper bandwidth pricing – the core theme from the day that HTS cannot be viewed in as a race to the bottom on pricing – HTS should instead be viewed as one element of an overall solution set that addresses growing customer needs. On the ViaSat-3 looming threat of dramatically cheaper bandwidth, the SES view is that you can’t start with the satellite and work backwards – success does not start with being able to build a 1 Tbps satellite, it starts with the customer need and then how you develop a solution (that involves satellite) to monetise that need.”
Jefferies said there is a “tremendous amount of optimism” over satellite constellation O3b, and what it represents for SES. “Steve Collar, O3b’s CEO, gave a robust account of the pricing elasticity of demand that HTS-MEO is unlocking (“across Asia Pacific, our customers typically have threefold the capacity today that they started with”). The bank’s report says: “The CEO was keen to emphasise how O3b positions itself around an SLA with its Telco clients – ‘they don’t care about the satellite, we are an integral part of their network and they focus solely on the service’. There is a big emphasis now on scaling O3b further to address ballooning demand. There was a slide on developing opportunities for O3b in aviation (200 Mbps to the plane), government aviation (100 Mbps UAVs), disaster recovery for corporates and public safety.”