Optimistic outlook for SES

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Satellite operator SES unveils its Q3 results on October 26th. One investment bank has rated SES “Outperform” in advice to investors, and paints a rosy picture.  Exane/BNP says that the potential gain from the US C-band spectrum realignment could be worth €10 a share in financial benefit.

The bank says: “We continue to see €10 per share of C-band value for SES. Our estimates are based on a total population of 300 million (vs 324m previously, allowing for some geo-partitioning), pricing of US$0.25 per MHz POP (vs. US$0.2 previously), clearing costs of US$1.9 billion, a tax charge of 20% and an SES share count of 460 million.

Sami Kassab, equity analyst at the bank, says that SES needs about 110 MHz of capacity (per satellite) to serve its (mostly) US cable clients.  “Our view is based on our analysis of cable video channel count and format on the top 11 satellites used for cable distribution in the US. We estimate that our analysis covers close to 1,500 channels out of the 2,000 existing channels. Our analysis assumes average consumptions of 2.3 Mbps for an MPEG 2 SD channel, 7 Mbps for an MPEG4 HD channel and 19Mbps for an HEVC UHD channel. For the sake of our analysis, we consider these assumptions to be conservative.”

SES has 4 satellites serving the US (SES 1, 2, 3 and AMC 11), and the bank calculates that it is probable that a total of 250 MHz will be sold off to aid the roll-out of 5G.

There are other users of C-band capacity including ATM machines, filling stations and some corporate data centres.

As to the upcoming SES results, Kassab says: “We expect the company to report an acceleration in SES Networks’ organic revenue growth to 14.6 percent from 8.5 percent in Q1 18 and 12.7 percent in Q2 18, driven by the continuing ramp-up of newly launched satellites. We also expect SES Video to report an organic revenue decline of -1 percent, in line with the Q2 18 performance.”


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