Advanced Television

SES hammered by investors

August 2, 2024

SES declared its H1 2024 results on August 1st. At first, the banks’ responses seemed content. For example, Sami Kassab, an analyst at BNP/Paribas talked about “in line” revenue growth (-4 per cent), although admitted that SES Video division did a bit worse.

But as the day unfolded, it was clear that the market was not happy. A modest rally then led to a steady slump. The end of the day saw SES shares to have suffered an 8.21 per cent fall (to €4.65).

The major worry is the Brazilian bankruptcy of Oi. The DTH operator was responsible for about 5 per cent of SES’s annual revenues (around €45 million/$48.7m) and that sum will be lost unless Oi finds a buyer for its business. Oi has paid SES what it owes for 2024, but this will not continue.

Kassab added: “This is unlikely in our view. However, SES management is aiming to mitigate this impact with further growth in Sports & Events and the roll-out of new Free to Air hotspots in emerging markets. Management guided that it will at least offset the Oi impact at the EBITDA level.”

There was good news, however. SES still has $0.4 billion of C-band compensation outstanding at the end of June, with €200 million coming in within the next few days, and the balance by H1 2025.

CEO Adel Al-Saleh rhetorically asked himself how SES would mitigate the problem, and said: “Through cost, which is something we can control very well. In addition, we will secure growth in additional revenue. We will make sure we have it covered with cost and then with revenue if we need it.”

Also on the positive side, SES reported €978 million in revenue for the first six months of 2024. Its increasingly important Networks division was up 5 per cent and is now responsible for 54 per cent of the company’s total revenue.

Al-Saleh also spoke positively about SES’s in-flight connectivity solutions, where there is “massive demand”. He said that its airline client increasingly want SES to bid directly rather than though service providers.

There was much the same response from it Cruise and Maritime clients. SES is active in its own regard but also works with Starlink (on its SES Cruise mPOWERED + Starlink options).

“Our cruise customers want dual source on the ship to leverage whatever capacity is available for ship operation and customer experience,” Al-Saleh told analysts. “As it grows, our revenue continues to grow and our margin continues to grow. If there is an insatiable appetite, and one solution doesn’t fix it, they need both solutions for continuous, resilient bandwidth.”

Al-Saleh quantified the value of its key satellite markets in its Media/Video division, saying that the DACH market brought in $325 million, while the rest of Europe generated slightly less than €300 million.

Categories: Blogs, Business, DTH/Satellite, Inside Satellite, Results

Tags: , , ,