SES: “Demand for government comms increasing”
March 21, 2022
SES has told investment analysts that its exposure to Russian or Ukrainian revenues is extremely limited. But it says that the conflict has increased demand for governments for military grade X-band communications has increased in the past couple of weeks.
The X-band usage is centred through its Govsat-1 capacity which is part of its SES-16 craft. Govsat-1 is a joint-venture between SES and the Luxembourg government. It was launched in 2018 and is dedicated to security and defence satcom applications.
SES says that normally it has less than 1 percent of revenues coming from Ukrainian clients, and less than 0.5 percent from Russia.
SES, in a dialogue with Sami Kassab, equity analyst at investment bank Exane/BNPP, says that the new expansion to the satellite operator’s Medium Earth orbiting mPower fleet have their pre-launch ground testing. The first two batches of satellites will be launched in Q2/22. Government, Cruise ships and other Fixed Data users are key target markets.
Kassab notes that the US Navy alone spends around $100 million annually on commercial satellites but capacity is limited to less than 30 Mb/s of data throughput per large military vessel. In terms of an aircraft carrier, for example, this means that the bandwidth is spread over some 6000 sailors on board.
“mPower can deliver over 30x more [capacity] and looks well placed to win this contract in 2026. Management believes Government will account for 30-50 per cent of mPower revenues,” says Kassab.
Another important element from the meeting is that SES hopes to announce more details on additional C-band monetisation in the coming weeks. An announcement could well emerge soon. March 21st sees the start of the Satellite 2022 show and conference in Washington DC and news updates are to be expected.
SES also updated its thoughts on the potential European-funded Low Earth orbiting service. SES told Kassab that discussions with the European Union’s relevant Commission departments are ongoing and these could lead to extra capacity orders for mPower. The bank is optimistic on the growth prospects for the SES Network segment and its estimated forecasts are 30 per cent ahead of the market’s consensus on Networks revenues for 2025.
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