Advanced Television

SES suffers 17-year low

March 2, 2020

SES has confirmed it is looking at restructuring its fast-growing ‘Networks’ division into a separate business. The decision, and potential shape of the plan, is not yet finalised but one option open to SES is to spin it off completely via an Initial Public Offering.

However, the cutting of its Dividend by 50 per cent plus other negative news badly hurt SES’ share price in trading on March 2nd, and crashing some 16 per cent at one stage to a 17-year low price of €8.79.

CEO Steve Collar told analysts that having a separated legal structure for the Networks division, in particular with the launch next year of its all-new mPOWER mid-Earth orbiting (MEO) satellites represents a major step for SES. Separating the business permits greater financial flexibility for the operation which, he said, was extremely scalable and not easily replicated. He added that a separated business would also permit greater financial transparency and the possibility of raising external capital for expansion.

However, as to its Video division Collar said that SES was looking closely at how it was serving some low-yield markets and that SES would “stop doing what others can do. [We would] stop unprofitable video services and embrace the cloud and leverage partners to access markets in certain markets, and focus only on high-value segments for direct [supply].”

Collar stressed that SES would reinforce its DTH and Free-to-air transmission reach and take care of its top customers. “We will simplify operations, maximise efficiency, de-layer organisation and become easier to do business with. [We will] review SES’ global footprint and consolidate in centres of excellence.”

Collar addressed the reduced annual Dividend and explained that this and next year represented a heavy Capital Expenditure (€360 million this year and €1.35 billion next year) excluding its obligations under the US C-band scheme. This “capital spike” in 2021 will see the launch of O3b’s mPower fleet as well as SES-17. Indeed, the overall CapEx for SES over the next 4 years tops $2.5 billion.

“We are financing these costs ourselves, and yet still managing to pay a dividend,” he told analysts.

Collar added that there could be a special Dividend return to shareholders as part of the C-band outcome and that a return to more normal dividends was possible.

However, shareholders seemingly did not much care for the news, and SES share price crashed almost 16 percent in early trading on March 2nd, to an extremely low €8.74. The last time its share price was this low was back in 2004.

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