Equity analyst Giles Thorne at investment bank Jefferies came out note to clients on September 19th covering the recent announcement from SES that it was ordering seven MEO satellites from Boeing as additional craft for its O3b fleet.
Currently, SES is the only satellite operator to cover most of the planet with both geostationary and Middle Earth Orbit (MEO) craft. The total investment in the new fleet is reportedly about $1 billion. The first quartet of satellites is likely to launch in 2021.
“SES used the occasion of the opening day of World Satellite Business Week in Paris to make official what it has trailed for some time – that it would be expanding its HTS-MEO proposition: O3b mPower is / will be a satellite-based system for delivering “multiple Tbps” of managed data services. On those basic terms, it is identical to the current O3b proposition – but SES is looking to leverage the latest innovations in space segment, ground segment and antenna to deliver a massive step-change in capability. SES calls O3b mPower the most powerful (7 satellites, 30,000 beams, “multiple Tbps” of capacity), flexible (fully shape-able and steerable beams) and scalable (spectrum filings allow for up to “tens of Tbps of capacity”) system ever [placed into orbit].”
“O3b mPower is not just about satellites,” the note continues. “Perhaps the most pronounced change in the evolution of O3b from its trunking application origins in 2009 to what we see today was the pivoting of the service towards a managed solution under the stewardship of Steve Collar (not surprisingly, now head of all networks business at SES). A managed service integrates multiple aspects of the value chain…and mPower will see a deeper level of satellite / ground segment / antenna / terrestrial network integration. This resonates as it pushes SES deeper towards fixed telecom network embeddedness, which in turn gives a cleaner value capture (or put bluntly, less scope for a competitor to come in and be price disruptive).”
The bank reiterates its “Buy” advice to clients.