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Bank: “SES C-band cashflows imminent”

January 6, 2022

By Chris Forrester

A report from investment bank Berenberg says SES is “on track” to receive post-tax C-band proceeds of over 80 per cent of its market capitalisation in just over the next two years.

The bank says: “This creates significant optionality for shareholder returns, balance sheet repair and disciplined investment. As phase one C-band proceeds are received in the coming months, combined with guidance at the full-year results that we expect to show broad financial stability in 2022 before growth in 2023, we think there is scope for building momentum of ‘good news’ in a sub-sector where this has been absent for a long time.”

The bank maintains its ‘BUY’ rating on SES and provides its Price Target to €10 (from today’s €7.18).

However, the report also cautions that while the C-band proceeds will be very welcome reassurance is needed on how the cash injection will be used. “SES is due to receive €0.7 billion in the next few months for phase one of its C-band clearing ($977 million, on which there will be tax of 20-25 per cent) and then €2 billion at the start of 2024 for phase two ($2.991 million before tax of 20-25 per cent). CEO Steve Collar has commented that he expects further industry consolidation, leading some investors to worry that proceeds may be reinvested into M&A. We can see the logic for further consolidation but believe that the current share price creates a high bar for any deal, given the attractive alternative of share buybacks.”

SES will issue its full-year numbers on February 25th. It will pay its dividend to shareholders towards the end of April.

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