SES: C-band extra benefits examined
February 25, 2022
SES unveiled its end-of-year numbers on February 24th and in its post-results analysts call, CEO Steve Collar explained that the satellite operator was “well ahead” of its work to prepare for FCC-mandated C-band conversion work for the SES.
Collar stated the C-band Phase 2 work meant SES was on track to receive the remaining $3bn from the FCC. SES must wrap the clearance process by December 5th 2023, and the revenues will be used “for a mix between return to shareholders, strengthening the balance sheet, and any disciplined value-accretive investment”. Tax liability on the C-band revenues will be the range 18-19 per cent overall.
Sami Kassab, an analyst at investment bank Exane/BNPP, in a note to clients after the call said there could be more good news to come in terms of additional C-Band benefits to SES.
“Management suggested it may update the market on additional -d proceeds in coming weeks. We note that management guided for an entry into service of US C-band satellites in early Q4/22. That is more than one year ahead of the December 5th, 2023 FCC-imposed deadline and leads us to reaffirm our views that additional clearing proceeds from an accelerated repacking could indeed materialise,” said Kassab.
Those extra payments could come from US telcos seeking early access to 5G capacity.
Collar also explained the position over the SES Astra 19.2 degrees East ‘hot spot’ which is Europe’s most popular satellite position and serving the German-speaking nations as well as France and Spain. There will be two new super-large satellites launched in 2024 which will replace the existing four craft operating at the slot.
Kassab says: “[The replacements] will generate capex savings guided at more than 50 per cent. We believe this will help protect the value of this orbital position.”