A report from Quilty Analytics makes tough reading for the world’s ‘Big Four’ satellite operators, and says that they could suffer combined adverse revenue losses of some $400 million (€357m) this year – mostly because of the Coronavirus impact on mobility.
Quilty says: “The trough of Covid-19 end-user mobility impact occurs in Q2 (June 2020). While the demand environment bottomed out in Q2, we expect that Q2 and Q3 will be equally challenging at the operator (vs. service provider) layer of the value chain, given a slight lag effect in the execution of contract concessions. Furthermore, it will be a slow and gradual return to “normal,” in our view.”
The analyst’s report uses Intelsat’s own forecasts, saying it currently projects its revenue and cash flow to be approximately $160 million lower than originally budgeted in 2020” primarily due to impacts on mobility, occasional use, and other (e.g., energy) Covid-19/economic impacts.”
As for SES the report quotes a company statement, which stated: “We do expect that our revenues will be impacted, particularly in our aeronautical segment, cruise and Sports & Events, that together make up 12 per cent of our revenue. We are working closely with our customers in these segments…[I]t is inevitable that we’ll be impacted during the rest of 2020. But as Steve said, it is too early to provide an assessment of the revenue impact…”
Eutelsat’s own expectations are: “These [Covid-19] effects still limited in the third quarter [ended March 31] will be more pronounced in the fourth quarter [ended June 30], representing a risk to full fiscal year ’20 revenues of the order of €20 million.” It is a timing issue in mobility which will resolve “as soon as the traffic is back, probably ’22 or ‘23…”
Ottawa-based Telesat’s forecasts says: “Although we expect to face some headwinds from the pandemic throughout the balance of this year and potentially beyond, we believe that it will be principally from customers serving the aeronautical and maritime markets, which we estimate (in the aggregate) represented roughly just 10% of our total 2019 revenue.”
Quilty’s own thoughts say that the middle of the last decade now looks like the best of times as the industry benefited from stable video demand and high prices for data/network services (far higher than today).
• Video revenues began declining ~2017 as cord cutting & streaming (OTT) accelerated. FSS’ video “golden goose” was vulnerable for the first time.
• HTS capacity, which became much more widespread roughly five years ago, ultimately brought significant supply that outstripped demand generation, driving sharply lower prices.
• Aggressive pursuit of the data markets has also driven greater operating costs versus long-term, wholesale video transponder leasing services.