SES says it will pay shareholders its 25c dividend later in October. The news coincided with a report from investment bank BNP/Paribas and while it does not reveal a great deal of ‘new’ news, it has some very interesting extra elements.

The report, from the bank’s Sami Kassab, notes that SES recently won a large $200 million 3 year contract with NATO for the US Space Force. This contract will generate around $60 million of annual revenues and SES will start recognising related revenues in Q4 2024 with low margin equipment sales initially and higher margin capacity services revenues next year.

“We believe this contract as well as further progress in Aero significantly reduces guidance risk for 2024 and note that in H1 management suggested the company is tracking towards the upper half of its EBITDA guidance. We believe this contract was already in management guidance,” said Kassab.

“We also note that SES recently renewed a 5-year contract with Sky UK and gained a further contract for the Starlink/SES combo with Resort World Cruise in Asia. The NATO, Sky UK and cruise contracts will be supportive to the backlog. SES suggested growth is currently constrained by the lack of available capacity. It also pointed that it was seeing “way more demand than they can serve” a comment flying in the face of the bear argument of price-depressing over capacity in the industry,” aded the bank.

BNP/Paribas also updated clients on how the IRIS2/SpaceRISE consortium is shaping up, noting: “The Space Rise consortium (SES, Eutelsat, Hispasat) has submitted a revised bid to the EU for the IRIS² project early September. Unlike the first bid, we understand this new bid from satellite operators addresses costs and timing concerns raised in the initial proposal put forward by satellite manufacturers earlier in the year. There is no time frame on when the EU may or may not accept this proposal. We believe SES might be interested in investing if the EU could work towards a 10 percent+ IRR in order to expand its MEO coverage and possibly gain access to IRIS² LEO layer. We also believe that recent people changes at the EU might prove supportive for satellite operators. We continue to see IRIS² as a possible positive development supportive of satellite operators share prices.”

“SES has reaffirmed its FY24 revenue and EBITDA guidance and is working towards delivering on consensus expectations of ‘table to slight growth’ in revenues and EBITDA for 2025 and to more than mitigate the €40 million revenues loss from the Oi contract loss in Brazil. The recent NATO contract gain on its own is worth around 2-3 percent of group revenues and will help turnaround top line trends in our view. For Q3/24 we expect €485 million of revenues and €238 million of EBITDA,” the bank continued.

“While the return to top line growth has been much delayed (partly due to Covid and partly due to satellite manufacturing issues with its key supplier), we continue to believe that SES will be able to return to structural growth from 2025 onwards as it brings additional mPower capacity to the market. We rate the stock +,” concluded the bank.

Other posts by Chris Forrester:

1. Differing opinions on Project Kuiper
2. IRIS2 contract signing at year-end
3. Icasa “over-reached” in confiscating StarSat kit
4. Starlink tests D2C in Romania, US, Japan
5. European telcos unite against Starlink D2C
6. Rivada insists “deadlines will be met”
7. Ergen will gain “greatest opportunity” by losing DISH
8. Rivada’s latest problems could be fatal
9. Intelsat gets licence to rescue Galaxy 25

Categories: Blogs, Business, Inside Satellite

Tags: bank, Sami Kassab, SES