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SES share price steady rise

May 27, 2022

May 25th saw SES’s share price rise another 1.69 per cent. This translates at just a €0.15 rise which is hardly spectacular, but added on to the 28 per cent rise over the past six months and that momentum translates into almost a full €2 rise. Indeed, a 12-month examination puts the SES stock on a 43 per cent rise (€2.68).

This is praiseworthy, although it is worth remembering that the recent past saw SES valued with prices of €17.36 in October 2019, and even €19.89 back in October 2018.

The five-year snapshot has seen a fall of 59 per cent (or €12.80 per share) and shows the volatility of the market and its sentiment towards satellite stocks.

However, to the credit of CEO Steve Collar and his team, today’s picture at SES is very different from five years ago. For one thing, SES is now very close to adding its mPOWER fleet of satellites into the O3b family of mid-Earth orbiting craft. The first batch (satellites 1-6) of mPOWER craft will launch in Q3/2022, and speedily brought into service.

Together with the upcoming launches of mPOWER’s extra satellites the overall SES-17 plus its mPOWER craft translates into a confirmed backlog of some $910 million. mPOWER’s first batch of satellites will be commercialised by the end of 2022. Collar has admitted that the mPOWER system was complex and pre-testing prior to launch was essential.

Collar also recently announced a subtle change to the mPOWER launch schedules. They had been planned for four launches overall, and that has slipped to five. The original plan was for two launches, each comprising 3 satellites in Q2 2022 with SpaceX. Then, another trio for launch in late 2022 and the final two craft in 2024. The new scheme is for three launches, each carrying two satellites in Q3 this year, then a 3-satellite launch during Q4/2022 and the final two satellites in 2024. Collar explained that some would now have higher orbital launches with an earlier-to-market availability and which would thus not impact revenues and which will see the mPOWER satellites commercialised early in 2023.

There’s also a quite significant imminent event but where Collar dare not assume it will translate into revenues. SES has wrapped its legal action against Intelsat and where the court’s verdict is keenly awaited. A negative (for SES) verdict from the judge could lead to an appeal, while a positive verdict could well lead to an appeal from Intelsat.

There’s the prospect of some sort of shareholder reward, perhaps even in the form of a special dividend, once the final payment from the FCC for SES clearing its C-band frequencies over the US is received by the end of 2023. This $3 billion ‘incentive payment’ (less tax) is a significant bonus for SES and will make a major impact in reducing its debt.

SES (along with other satellite operators) is also now enjoying the post-pandemic recovery in Mobile (already 28 per cent of Networks revenues) with Cruise lines and passenger demand on aircraft for In Flight entertainment and connectivity.

SES’s Video division is best described as being in ‘managed decline’ as some parts of the world switch of streamed content. But Video certainly isn’t going to vanish overnight. Heavyweight players such as Sky and the German free-to-view public broadcasters are happy to renew and extend their long-term contracts. Ten years from now, it might be a different state of affairs, but meanwhile DTH and the satellite ‘hot spots’ SES has secured will remain a key advantage for SES.

The adjusted net debt at SES is already on a downward trajectory (it fell 9 per cent y-o-y from 2020 to 2021) and is now at a six-year ‘low’.

Perhaps investors are taking note of this progress and helping drive the SES share price upwards.


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