SES share price rockets after merger collapse
June 23, 2023
By Chris Forrester
SES issued a somewhat cryptic statement on June 22nd following the collapse of its hoped-for merger with arch-rival Intelsat.
The SES statement read: “There are always two parties in a negotiation. It has become clear that a path to an agreement which would be acceptable to SES and Intelsat cannot be found, and so both parties have ceased discussions.”
However, SES shareholders seemed to disagree with the SES/Intelsat outcome, and buyers were out in force and sent the SES share price up 7.8 per cent (38c) to €5.24.
Sami Kassab, an analyst at investment bank Exane/BNPP, in his review of events said that SES was maintaining its formal financial guidance for the rest of its trading year. He says that Video division revenues for the year will be similar to its Q1 trading performance.
“In Networks, Fixed Data is likely to have seen an uptick (Q-o-Q) while Government and Mobility seem to have had flattish Q-o-Q performance. A few days ago, SES hosted customers in Luxembourg to demonstrate mPOWER capabilities using beams for mPOWER [craft] 1 & 2. We believe this suggests satellites are working well,” said Kassab.
“We expect Q2 revenues of €487 million (-3 percent organic revenue decline) driven by -4 percent in Video and -1 percent in Networks on the lack of new capacity,” added Kassab. SES publishes its Q2 results on August 3rd.
The Exane/BNPP report continued: “With no firm launch date for mPOWER [craft] 5 & 6 set yet and spacecrafts still being tested in the Boeing factory, we now expect the entry into service of this new constellation to happen in Q4 rather than late Q3. We note that mPOWER satellites 3 & 4 launched on April 29th 2023 are still in orbit-raising phase. In other words, given in-orbit testing, we estimate the delay between the launch of mPOWER 5 & 6 and the entry into service of the constellation is likely to be 3-5 months. We believe that another small delay in the entry into service of mPower could drive a small consensus downgrade. A longer delay would drive a larger downgrade for FY23 but have no significant impact on consensus forecasts for FY24.”