SES renews Sky deal; FY revenue dips
February 25, 2021
By Chris Forrester
Ahead of its results announcement, SES confirmed it had extended its contract with Sky UK that will result in a €90 million gain in its secured backlog. SES added: “By the end of the renewed contract, Sky UK will have been an SES customer continuously for almost four decades.”
“This is a significant, multi-transponder, multi-year renewal founded on SES’s decades of delivering a flawless and immersive TV viewing experience to Sky UK customers. It also underlines the continued and rising importance of satellites in delivering a premium content viewing experience to end customers virtually everywhere,” said Steve Collar, CEO at SES.
SES, in its full year results, spoke of “a strong year of execution, a clear path to profitable growth and a commitment to shareholder return” which might do something to boost shareholder confidence in terms of the operator’s poorly-performing share prices.
Collar spoke of SES and its third successive year of high EBITDA performance, saying: “2020 was a strong year for SES. The combination of considerable commercial execution and laser focus on controlling discretionary spending ensured that, despite the Covid-19 environment, we protected the bottom line with Adjusted EBITDA in line with our pre-Covid-19 outlook and at the top end of our mid-year outlook. We successfully executed our Simplify & Amplify programme delivering OpEx savings of €50 million from 2022 onwards, while Net Debt and leverage is at a 5-year low on the back of strong cash generation.”
Collar updated the market over the SES auction in the US saying that SES was “on track” to realise $4 billion pre-tax from US C-band clearing with end-2021 milestone triggering the first $1 billion in accelerated clearing payments to be fully used for deleveraging.” SES added that the remaining $3 billion of FCC incentives (triggered at the end-2023) will used in the most optimal way for the benefit of Shareholders.”
SES said it is “Actively engaged in additional C-band monetisation opportunities both in the US and in other countries.”
SES also stated that its $1.8 billion legal claim against Intelsat is being vigorously pursued.
He added: “We secured more than €1.3 billion in customer agreements in the year including an important long-term commitment with Canal+ covering multiple orbital positions; contract extensions with public and commercial broadcasters across our prime video neighbourhoods; new MEO-GEO-based solutions for the US Government; new Telco and MNO connectivity solutions in Latin America and Asia; and, in return for supporting customers whose businesses are especially affected by Covid-19, secured additional backlog in Cruise and Aero. Our recently announced renewal and extension with Sky means that, to date, we have added more than €440 million in contract backlog at our core video neighbourhoods since the end of Q3 2020. 2020 was a year like no other for our employees and customers alike. We moved swiftly and successfully into a remote office environment, protecting customer and satellite operations in the process.”
Specific results highlights include:
- Video revenue falls -8 per cent (y-o-y) to €1.108 billion
- Networks revenue rises +5.3 per cent y-o-y to €767 million
- Networks revenues up 27 per cent since 2017
- Group revenue falls -3 per cent to €1.876 billion
- Over 80 per cent of 2021 group revenue outlook of €1.76 billion-€1.82 billion already under contract. Continued focus on operational excellence, reducing cost and discretionary spending supporting 2021 Adjusted EBITDA outlook (€1.06-€1,1 billion)
- SES-17 and O3b mPOWER, with gross backlog up 40 per cent since Q3 2020 to $740 million, to launch in 2021, driving an acceleration of growth in Networks from 2022 onwards and sustained profitable revenue and Adjusted EBITDA growth for SES from 2023
- CapEx reduced by €390 million over 2020-2024 compared with previous forecast, lowering growth investment peak in 2021-2022 and followed by substantially lower average annual CapEx of €375 million (2023-2025)
As far as the current 2021 financial year is concerned, SES issued its guidance saying that overall revenue is expected to be in the range of €1.76- €1.82 million.