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What happened? SES reported Q2 25 revenues of EUR469m broadly in line with expectations (1% above the company compiled consensus) driven by a stronger than expected revenue performance in Government (up 21%) and weaker elsewhere. Q2 25 adjusted EBITDA came in 4% ahead of consensus at EUR241m. Group revenues grew 0.1% in Q2 with 12.5% organic revenue growth in SES Networks now offsetting a 13.6% decline in SES Video. Management has reaffirmed its FY25 outlook of stable revenues and broadly stable adj. EBITDA. Following the closing of the Intelsat acquisition, SES has also reaffirmed all elements of the combined entity guidance, in particular its low to mid single digit revenue CAGR24-28 and mid single digit adjusted EBITDA CAGR24-28. Management continues to target proforma net debt to EBITDA of the combined entity to be below 3x in 12 to 18 months helped by an annual run rate of EUR370m of synergies. SES has also announced that it will develop and launch a new defence satellite for GovSat with the Luxembourg Government. BNPP Exane View: SES Q2 results are broadly in line with expectations and the company is well on track to reach its FY25 guidance. Both the new defence satellite and the strong growth in SES Networks Government underpins the appeal of the stock in the current geopolitical and European Defence context. The successful launch of mPower 9 and 10 on July 22 will further help expand the capacity on this next generation network. SES share price has more than double since its all-time lows earlier this year. Yet, the stock continues to offer an 8.4% prospective dividend yield reflective of investors doubt on the group''s ability to maintain its dividend and operational performance in the context of higher competitive pressure. We continue to believe however that SES is well positioned in the satellite communications industry as a government-focussed European player with a state-of-the-art next generation MEO constellation. We expect the...
SES SES SA FDR (Class A)
C-band is back and too big to ignore. As is the EUR800bn ReArm Europe plan, with its focus on satellite communications. Geopolitical tailwinds are supportive. But amid these positive catalysts, we believe new entrants will increase competitive pressure. We also think a dilutive capital increase for ETL is increasingly likely. With its more solid balance sheet, we prefer SES (+) over ETL (-). Starlink V3 and new US/Chinese entrants to increase competitive/pricing pressure We expect a significant increase in capacity and competition from the launch of Amazon Kuiper, China GuoWang and G60 LEO constellations in the next 18-24 months. When ready, each Starship launch of Starlink V3 satellites will add c50 Tbps of capacity, equivalent to the total currently in orbit. Favorable geopolitical factors improve competitive positioning Increased European defense spending is likely to support SES/Eutelsat revenues as governments increasingly prioritize commercial satellite communications (SATCOM). With 30% of group revenues exposed to Government services, SES stands to benefit more than Eutelsat (c16% exposure). C-band valuation should enhance SES balance sheet; dilutive capital increase likely at ETL Our review of comments on the FCC docket has us include a EUR771m and EUR77m C-band valuation for SES and ETL respectively. With EUR6.5bn of investment and refinancing requirements by 2030, we now see a higher chance of a potentially dilutive c. EUR2bn capital increase at Eutelsat. Attractive valuation and better exposure: prefer SES (+) over ETL (-) SES (+, TP unchanged) trades on 5.3x EV/EBITDA26e proforma for Intelsat and offers a 10% dividend yield, while Eutelsat (-, TP unchanged) is on 5.1x. SES has more Government exposure and less Video/Russia risk with stronger technology infrastructure, a more solid balance sheet and significant C-band upside potential (we estimate worth 39% of market cap). On Eutelsat, we see a potential capital increase as an...
SESG SESG ETL ETL
SES reports Q1 25 results and reaffirms its FY outlook SES reported EUR509m of revenues with a 0.5% revenue decline. SES Video was in line with expectations with a double digit decline driven by the OI bankruptcy in Brazil as well as volume reductions in mature markets. SES Networks reported an 8% revenue growth or 11% when excluding periodic revenues in Q1 25 of EUR19m and of EUR22m in Q1 24). EBITDA beat expectations by 14% at EUR280m. Management has reaffirmed all elements of its FY25 guidance of ''yoy stable revenues and broadly stable EBITDA''. SES also announced its intention to redeem cUSD2bn of Intelsat 6.5% First Lien Senior Secured Notes in order to optimize the group''s balance sheet structure. SES currently holds EUR3.1bn of unrestricted cash. It has also received an initial USD58m insurance payment (out of USD472m claim) on mPower default and expects more insurance receipts. BNPP Exane View: Solid results, guidance in line, balance sheet optimisation positive SES reported solid Q1 25 results with a 14% beat at the EBITDA level. The way the company reports one-off periodical revenues is not helpful and somewhat blurs the picture, but SES Video and SES Networks performance looks broadly in line with expectations. Management continues to expect Intelsat to close in H2 25 and has already communicated plans to optimise its balance sheet structure. We remain Outperform and expect a positive share price reaction.
SES has reported solid FY24 results and guided for flat revenue and EBITDA in 2025 With group revenues of EUR2,001m and adj. EBITDA of EUR1,028m, SES FY24 performance came respectively 1% and 3% ahead of consensus. Despite the negative impact from a customer bankruptcy in Brazil, management guided for flat revenues and EBITDA for 2025. It has also reaffirmed all elements of the SES/Intelsat combined entity. mPower already fully sold out We believe the main takeaway from the release was management''s statement that both O3b Classic and mPower capacity was already fully sold out, forcing management to take capacity away from lower-priced Fixed Data to service the demand for higher-priced Government segment. Despite talk of Starlink dominance, excess capacity, and pricing pressure, mPower is already sold out. SES Networks revenue growth has remained positive since SpaceX launched the Starlink satellite. This underpins our view that SES Networks is sufficiently differentiated from Starlink for both to prosper. Towards more cash returns Management also announced that when leverage of the combined SES/Intelsat entity falls below 3x (expected by end of 2026/early 2027), it would prioritize shareholder returns when allocating any future exceptional cash flow. We believe this suggests that both the insurance claims of EUR472m and potential future C-band proceeds are likely to be returned to shareholders. Outperform reaffirmed, TP cut to EUR8 (from EUR10) For 2025, we cut orgrev growth from 3% to -0.5%, but raise EBITDA by 1%. For 2026, we cut orgrev growth from 8.5% to 0.8% for 2026 and EBITDA by 11% due to delays in the entry into service of new satellites. We cut our SOTP-based TP to EUR8 accordingly. Our EPS cuts reflect higher DandA and interest costs. With a div yield of 12%, we believe SES is priced for a bear-case scenario. Strong demand for mPower capacity, stabilising operating trends and strong optionality (C-band, insurance claims, Intelsat...
What happened? Shares in Eutelsat (+10%) and SES (+3%) were up strongly on Monday on talks of the US cutting Ukraine access to Starlink and expectations that Eutelsat/SES could replace Space X service. Christophe Grudler, EU Member of Parliament, in charge of the IRIS2 constellation project and co-chair of the Sky and Space group at the EU Parliament has gone public on X and asked Commissioner Kubilius, in charge of Defence and Space at the EU Commission to consider alternative satellite solutions. In particular, Grudler asked the Commission to explore ''to facilitate or finance the deployment of commercial European satellite services'' and to assess whether ''GOVSATCOM could be mobilized to ensure continued connectivity for Ukraine'' in the case Starlink were to be cut off in Ukraine. BNPP Exane View: GOVSATCOM is a programme with significant involvement from SES, in particular SES mPower. Eutelsat OneWeb is a competitor to Starlink and, in our view, the main alternative satellite solutions referred to by the EU MP. Key technical considerations are likely to be signal jamming resistance (we believe more advanced on mPower than OneWeb and less advanced than on Starlink) and terminal form factors (small, rugged, lightweight terminals that can be carried on a person or mounted on a vehicle for OneWeb vs. larger and bigger terminals for SES mPower). While still a remote option, we believe that an exit of Starlink from Ukraine could provide Eutelsat and SES with a new and attractive revenue stream.
The EU commission awards the IRIS2 to SpaceRise On October 31st the EU commission announced it had awarded a concession agreement to SpaceRise, the Eutelsat/SES-led consortium. No details have been disclosed so far. SpaceRise was the only bidder and given the strong political support for this program the EU had no alternatives than to choose this consortium. IRIS2 will be a state-of-the-art LEO, MEO, GEO system whose full entry into service is planned for early 2030. It is Europe''s answer to Starlink/Kuiper. SpaceRise said to invest EUR4bn in capex and tax payers to fund another EUR8bn According to SIR, an industry newsletter, Eutelsat is to invest EUR2bn, SES a little bit more than EUR1bn and Hispasat a little less than EUR1bn. SIR referred to an unconfirmed total project cost of EUR12bn. So far, the EU Parliament voted EUR2.4bn funding to 2027 and the European Space Agency voted a further EUR0.6bn to finance this program. Securing EU funding past 2027 looks like the main risk for the industry. According to SES most of its related capex will be deployed from 2028, presumably after EU funding for 2028-2032 has been secured. The company stated it will maintain its investment grade rating and its dividend. IRR to exceed 10% with built-in protection mechanisms SES is to generate an IRR above its target threshold of 10%. The concession agreement will include built-in protection mechanisms to guarantee a minimum IRR level. We believe IRIS2 is likely to embark Eutelsat OneWeb Gen 2 payloads and reduce the investment burden for shareholders. More details to come but IRIS2 is a positive for SES/ETL SpaceRise and the EU Commission will now engage in finalising the precise contractual agreement. We see this news development as a positive for SES (+) and Eutelsat (-). Commercial operators will benefit from massive public funding support, increase their competitiveness and are in line to generate a double digit IRR on their investments with a guaranteed...
Solid H1 results SES'' organic revenue growth of -4% in Q2 24 was in line with expectations. SES Video did a bit worse, offset by SES Networks which did a bit better. Within SES Networks, Government came in stronger than expected, offsetting the weaker trends in Fixed Data and tough comps at Mobility. Group EBITDA of EUR250m was 6% ahead of consensus. EBITDA guidance slightly raised Management reaffirmed its FY24 revenue outlook and now guides to land in the upper half of the EUR950-1,000m range. With the ramp up of mPower, we expect SES Networks revenue growth to accelerate while SES Video revenues in H2 are guided to be at least on par with H1. Oi bankruptcy to weigh on SES Video in 2025 On April 19th creditors approved the judicial reorganization plan of Oi, a large, over-levered telco operator in Brazil which happens to be an SES Video client accounting for approximately EUR45m of annual revenues (or ~5%). These revenues will be lost from 2025 onwards unless Oi manages to find an acquirer for its DTH business. This is unlikely in our view. However, SES management is aiming to mitigate this impact with further growth in Sports and 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. We have cut our SES Video 2025 orgrev growth from -5.5% to -8.4% but leave outer years unchanged. We lower our FY25-26 Adj. EBITDA by ~5% to reflect the above. Return to top-line growth from 2025 underpins our Outperform; TP unchanged SES share price has remained weak year to date. However, we still expect SES Networks growth to accelerate in H2 24 and even more so in 2025 when it should be big enough to offset declines in Video. Government accounts for close to 30% of group revenues and is beating expectations. SES is an underrated beneficiary of increasing European and global spending on defense - a theme that should help SES return to sustainable top-line growth from...
Two major pieces of news hit SES (+) and Eutelsat (-) yesterday Yesterday morning the Handelsblatt ran an article suggesting that the German finance minister, Robert Habeck, is opposing funding IRIS2 in its current form. In the afternoon, Bloomberg reported that SES and Intelsat (NR) have revived merger talks. We believe both news could be linked. IRIS2 likely to be delayed Negotiations between the SpaceRise consortium and the EU Commission on IRIS2, the European Starlink project, were initially expected to close in December 2023, then in March 2024. There is still no news on financial terms of this major Public-Private Partnership. Worse, yesterday it became public that Germany was opposing funding IRIS2 on the current proposed budget envelope of EUR12bn. We believe IRIS2 could be facing long delays. SES and Intelsat said to be reviving merger talks In an industry where scale increasingly matters, SES and Intelsat are said to be reviving merger talks that ended last June. While we remain sceptical on the strategic merit of such a deal for SES, we believe that at the right price it could create value as SES would benefit from cost and capex synergies and tap into Intelsat huge tax and C-band assets. We estimate that an all-cash deal on a 10% premium to Intelsat current estimated equity value would result in SES newco operating on 3x Net debt to EBITDA24 falling to 2x by 2026. Eutelsat most exposed Intelsat has become a large customer of Eutelsat OneWeb following signing of a USD250m deal in March 2024. A merger with SES might lead Intelsat to revise this deal. A favourable outcome of IRIS2 would, in our view, have helped Eutelsat fund OneWeb Gen 2. This now looks like a more remote scenario. We continue to prefer SES (+) over Eutelsat (-) on its stronger strategic and financial position and more attractive valuation.
Q4 revenue beat expectations SES Q4 revenues came 7% ahead of expectations with both Video and Networks at the higher end of expectations. Solid mPower terminal sales in Government helped drive the beat and are a good leading indicator for future demand for mPower capacity. An unexpected change in regulation resulted in a new recurring EUR16m annual charge all booked in Q4 23. This explains the lower-than-expected EBITDA and EBITDA margin for Q4 23. Capex was lower than expected. DPS is in line. SES is moving to a semi-annual dividend payment with an additional EUR0.25 in October. FY24 outlook 3-4% ahead of expectations Management guided for growth in SES Networks and a mid-single-digit decline in Video, resulting in a guided revenue range 3% ahead of consensus at the midpoint. Management suggested it is aiming for the upper end of its EUR1,940m-2,000m range. Despite higher start-up costs, EBITDA 24 guidance came in line with expectations. We raise our FY24 revenues by 4% and EPS 24 by 2%. Good progress on deleveraging With a further USD410m of FCC payment and a potential USD472m insurance claim pending, SES''s balance sheet leverage is trending towards 1x. Management has announced the repayment of EUR1bn of gross debt. Solid progress on the deleveraging is a positive, in our view. More clarity on capital allocation at the interim results The negative share price reaction likely reflects the lack of announcement on capital allocation. With IRIS2 potentially requiring a sizeable investment (newsflow expected in March/April), we find it understandable that the CEO of 4 weeks needs more time to formulate the capital allocation strategy. For the benefit of long-term shareholders, we continue to argue that protecting the balance sheet of a company in a disrupted industry should take precedent over cash returns. We expect SES to return to sustainable top-line growth from FY25 as mPower takes off. We remain Outperform.
SES beats on Q3 and confirms guidance for FY23 SES delivered EUR507m and EUR262m of Q3 revenues and EBITDA, some 4% ahead of consensus. Group organic revenue growth of 3% was the strongest in 8 years and marked the second consecutive quarter of revenue growth. SES Video declined by 2.5% (vs. consensus at -4/-5%) and SES Networks reported 9% orgrev growth (vs. cons at +2%). EBITDA margins of 52% were in line. Management has reaffirmed its FY23 guidance. mPower entry into service delayed to April 2024 SES and Boeing have signed a new commercial agreement. Boeing will upgrade mPower satellites 7 to 11 and manufacture two additional spacecrafts with no impact on SES capex. We believe it had to concede this commercial gesture as tech issues on batch 5 and 6 to be launched on November 12th have not been fully fixed. Tech issues will affect the operational life of mPower 1-6 and lead to an impairment charge in FY23. Satellites are insured and management believes have enough capacity to service existing and future customers. However, this delay drives our EPS cut. C band cash leads to significant deleveraging SES has cashed in the C band bonus payment and will receive an additional EUR445m from the FCC for expense reimbursement. Net debt to EBITDA stood at 3.5x as of September 2023 but will fall to 1.4x by year end. C band cash proceeds will be used to call the EUR550m/5.625% hybrid bond in January 2024 with the remainder yielding 5% pa. Financial charges will be significantly lower next year and alleviate the operating impact of the mPower launch delay and capacity constraint. The EUR150m (4% of market cap.) share buyback is to start within days. Last bit of bad news... we think! With the November 12th launch imminent and the full scale of the mPower tech issues now disclosed, we believe the mPower equity story is likely to regain momentum. 2025 is likely to mark a return to sustainable growth. This is much later than hoped for but still makes the...
H1 beat expectations as SES returns to revenue growth after 5 years of decline After 5 years of revenue decline SES has returned to positive organic revenue growth with a consensus-beating +0.6% in Q2 23. This performance was driven by lower-than-expected revenue decline at SES Video as contracts indexed on inflation helped pricing while SES Networks accelerated on strength (+30%) in Maritime. EBITDA came 4% ahead of expectations. mPower delayed to end of year and tech issues revealed Management has announced another delay in the entry into service of mPower, now expected by end of 2023 (vs. late Q3 23 previously). We believe the many delays have to be seen in the context of the tech issues revealed by the company. Management argued that mPower had encountered sporadic technical issues on a fraction of the electronic components of payloads already in orbit. Management claimed it can recover functionalities as these glitches happen and that it has adapted its procedures. Management does not expect a short- or long-term impact. We note that SES 17 and mPower combined backlog expanded by 4% in the quarter despite consumption on SES17. Full-year guidance reaffirmed. Share buyback announced as C band proceeds arrive in Q4 Management has confirmed all elements of its FY23 guidance. It also announced it had completed the C band clearing ahead of schedule and would receive the USD3bn pretax bonus payment in Q4. Management announced a surprise EUR150m share buyback. Outperform reaffirmed We have adjusted our 2023 forecasts to reflect the new start of mPower, lower video decline, the share buyback and forex. Our 2023 and 2024 adj. EBITDA remain 2% and 9% ahead of VA consensus pre release. We continue to believe in the commercial success of mPower and hence in the sustained return to growth of the company, which is far from discounted in the share price. A contract award from the EU Commission on IRIS2, increased cash returns to shareholders post C band...
SES delivers solid Q1 results and reaffirms FY guidance SES revenues and EBITDA came in 1% and 4% ahead of consensus respectively. SES Networks'' organic revenue growth of 3% was ahead, driven by 14% growth in Mobility. SES Video was in line with expectations at -5%. EBITDA margins beat consensus expectations by 170bps. All elements of the guidance have been reaffirmed. Confirmed to be in talks with Intelsat SES confirmed on March 29th that it has engaged in talks with Intelsat with regards to a possible combination. Management did not disclose any further details. While we believe that at the right price such a deal would make strong financial sense, we still think the strategic angle is more debatable. We note that we estimate the NPV of the tax benefits that SES would generate to be at 20% of its current market cap. mPower, C-band, IRIS2 projects are all progressing well SES has completed more than 90% of its C-band repacking and is well on track to receive USD3bn in C-band payments by year end. Next month, Space X is due to launch the two last satellites needed for mPower to launch its global service in late Q3. With SES joining the consortium, which comprises all of the key players in the European space industry (Eutelsat, Hispasat, Airbus, Thales), the likelihood of the company benefiting from the IRIS2 project increases significantly. Forex-driven EPS revisions. Outperform maintained We have marginally raised our underlying revenue growth forecasts for FY23, driven by the solid performance of SES Networks. Recent forex movements drive most of our EPS revision. We continue to expect SES to return to revenue growth next year as it benefits from the entry into service of mPower. C-band proceeds will improve the balance sheet structure (from Net debt/EBITDA of 3.6x currently to 1x) and make valuation appealing. IRIS2 adds further positive optionality contributing to the return to growth. However, we believe that investors will need more...
SES delivered a strong set of Q3 results. The numbers came in slightly above expectations and the company reiterated its increasingly conservative guidance. Although the satellite launches are progressing as planned with the first launch of the O3b mPOWER expected in December, the entry into service date has been postponed by one quarter. We believe the company will demonstrate resilience next year as it remains driven by the Network activity.
SES reported solid Q3 results with a 3% beat on EBITDA SES Networks organic revenue growth accelerated to 4% in Q3 22 (vs. cons. at 3%) driven by a 21% jump in Mobility (cruise and areo) and growth in Fixed Data. With the headwind from the 2021 US troops withdrawal from Afghanistan abating in Q4, we expect the division to accelerate further in Q4. Video was in line and EBITDA came 3% ahead. Management confirms outlook Management has confirmed all elements of its FY22 outlook and reaffirmed that it expected SES Networks to gradually accelerate towards double-digit revenue growth, while it was aiming to ''flatten the curve'' of revenue decline in SES Video. First mPower satellites to launch on December 15th Management has now communicated the launch date of the first two satellites of its new mPower system. Space X is scheduled to launch them on December 15th. This will be followed by the launch of an additional 4 satellites in Q1 23 and an entry into service in Q3 23. With mPower ground equipment currently being deployed, mPower will start generating incremental revenues on Day 1. Its adjusted order backlog grew by a further c4% in the quarter. C-band proceeds within reach SES has successfully launched its first 3 C-band satellites and has consequently line of sight of the upcoming USD3.2bn gross proceeds from C-band clearing. We expect proceeds to be allocated to deleveraging, cash returns and reinvestment, possibly in the new EU space system. Outperform maintained We have tweaked our forecasts with no meaningful EPS changes. With the mPower launch confirmed we continue to expect SES Networks growth to accelerate and to offset Video decline next year. We reaffirm our Outperform rating and see the 15 December launch as the next catalyst.
º Mobility performs above expectations Guidance unchanged, C-band plan is on track
Satellite communications have entered the NewSpace age, where a tech-investment boom and the emergence of massive non-geostationary constellations are likely to reshuffle the cards between established players and deep-pocketed new entrants. In this report, we review market opportunities in the sector, as well as technological disruptions and the challenges facing incumbents, while extending our coverage to initiate SES and Eutelsat. We initiate Eutelsat with a Sell recommendation, with the acquisition of OneWeb heavily weighing on financials and the risk profile. We initiate SES with a Neutral recommendation: rising LEO initiatives are adding new and credible competition to SES’s low-latency MEO constellation. While expectations from C-band proceeds cannot be ignored in the share price, capital allocation remains uncertain in a context of growing competitive threats.
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