The satellite industry’s big 5 operators (Intelsat, SES, Eutelsat, Telesat and Viasat) have all now reported their quarterly numbers and – in summary – they are not good.
Sami Kassab, an analyst at investment bank Exane/BNPP, in a useful summary note to clients says that overall, operating trends for the industry remain challenging with Intelsat group revenues declining 3 percent in the quarter, SES and Eutelsat’s declining 2 per cent, Viasat’s down 6 per cent and Telesat group revenues down 14 per cent for the quarter-year.
Kassab adds: “But we argue this quarter confirms our view that SES Networks is best in class and winning market share. SES Networks revenues grew 8 per cent or $17 million in Q3 whereas Intelsat Network + Government grew only 1 percent or $2 million and Eutelsat Networks (Fixed Data + Mobility + Government) declined 4 per cent while Viasat Government + Commercial Networks was down 12 per cent.”
“We also note that demand from the US Government for commercial satellite capacity has been strong with Intelsat Government up 13 per cent, SES Government up 6 per cent and Eutelsat up 1 per cent,” he says,” and pointing out that Viasat’s Government business was down 13 per cent.
“Media/Video remains the most challenged segment with Intelsat Media headline revenues down 9 per cent, SES Video down 8 per cent, Telesat probably down double digit. At -1.5 percent Eutelsat Video continues to be the best performing player. We rate SES + and ETL=,” says Kassab.
Not mentioned by Kassab were some key challenges facing the sector: Viasat, for example, is losing its CEO Mark Dankberg who is stepping aside (and will become ‘Executive Chairman’) handing over his CEO position to Rick Baldridge, the company’s COO.
Intelsat is in Chapter 11 bankruptcy reorganisation.
Telesat of Canada has two major shareholders who have been reluctant to agree on the next stage for the business.
SES has just changed its mind on whether to divide itself into two distinct businesses (Video and Networks) saying they are going to stay as they are. But their share price is in the toilet, and not helped by slashing their shareholder dividend.
Eutelsat might be considered to the safest business in the cluster, but again a reduction in a normally dependable share dividend has harmed the company’s share price. Both SES and Eutelsat need to rebuild investor confidence if they are to recover the sort of valuations enjoyed 24 months ago.