Advanced Television

SES share price crashes on Sky broadband news

January 26, 2018

By Chris Forrester

Satellite operator SES saw its share price tumble during trading January 25th following the news that Sky will shortly launch further online access to its programming. At one point, SES shares hit €12.74 (down €0.75) and getting worryingly close to a 12-month ‘low’ of €12.40. In June 2017 the operator’s share price stood at €23. Trading later in the day saw a recovery to €13 per share (a 4 per cent fall on the day). SES share price is down 35 per cent YoY.

Eutelsat was also impacted because Sky use Eutelsat capacity to serve its Italian market. Eutelsat share price (on the Paris exchange) fell some 1.95 per cent (37.5 cents) to €18.82.

Sami Kassab, investment bank Exane/BNPP’s senior satellite analyst, said the SES fall was excessive, and related to Sky’s news that its new Sky Q set-top box would roll out to new markets (Germany/Austria and Italy). “We do not believe this is a new piece of information. Last year Sky already said that the Sky Q set-top box would work over the Internet and reduce reliance on satellites. The aim is to help Sky reach an audience that cannot install satellite dishes. Sky’s CEO estimates that in its markets around 6 million households cannot install a dish for building law or tenancy law restrictions.”

“While not new, this development underpins our view that satellite reach rate is likely to decline in mature markets,” added Kassab. “Pay-TV operators have lower subscriber acquisition costs on internet networks than on satellites as they do not need to [fund] a dish or installation. It is in Sky’s interest to push for terrestrial rather than satellite distribution of their services. However, we continue to expect European Video transponder pricing to remain stable as satellite operators continue to provide access to the majority of Sky’s and other Pay-TV’s subscriber bases. In the long run, we assume that a sufficiently high proportion of Pay-TV operators subscriber base will continue to need a satellite dish to justify paying for transponder distribution.”

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