SES Networks Growth is Catching Up to Video Losses

Photo: SES

SES‘ data division is closing the gap between its growth rate and the operator’s Video segment losses. SES Networks reported double digit year-over-year growth in the operator’s first half 2019 financial results, released July 26. But, the business unit is still not large enough yet to offset the losses of the SES Video segment, as Video still makes up 63 percent of the company’s total revenue. However, Video made up 67 percent of the company’s total revenue in 2018.

Overall, SES’ revenues are down 2.0 percent, OpEx is down 4.6 percent, and EBITDA is down 5.9 percent. Free Cash Flow before financing activities was 30.3 percent lower than the First Half (H1) of 2018.

Following the outcome of the strategic review, announced in October 2018, the commercial operations of YahLive (a partnership between SES and YahSat in which SES has a 35 percent participation) will be fully integrated within SES Video from the Third Quarter (Q3) 2019 with the focus to build on the existing commercial pipeline and drive operational efficiencies.

SES CEO Steve Collar commented, “while the market environment in Video remains challenging, we’ve delivered value to customers across our core neighborhoods and are starting to see benefits of bringing together our infrastructure and MX1 businesses into a single operational unit.”

Within SES Networks, Mobility saw underlying revenue grew by 10.9 percent (year-on-year) at constant FX. Aeronautical once again delivered strong growth driven by the steady increase in the fill rate of SES-15 and SES-14, meeting the strong demand for bandwidth and services from Aero Service Providers supporting North and Latin American airlines.

In Maritime, the cruise segment continued to lead growth with the expansion of agreements with existing cruisecustomers and contributions from new cruise operators signed. As a result, SES is now supporting four of the top five global cruise operators, representing significant vessel expansion potential.

Within SES Government’s segment, underlying revenue grew by 7.9 percent (year-on-year) in H1 2019, reflecting further growth in both the U.S. and
Global Government businesses There was strong growth across the Global Government portfolio, driven by the expansion of humanitarian and
peacekeeping operations, institutional projects and the full six months’ contribution of GovSat-1 in H1 2019.

“With encouraging levels of demand across our Networks segments, I’m looking forward to the contribution from the additional O3b satellites, which very recently came into operation, as well as being that much closer to the launch of O3b mPOWER in 2021,” Collar said.

The company is not adjusting its financial outlook.

During the financial results, Collar also reported on the progress of the C-Band alliance, in its efforts to work with mobile carriers and regulators in the reallocation of 5G spectrum. “With respect to C-Band and our ongoing market-based engagement in support of the rapid deployment of 5G services in the U.S., through the C-Band Alliance, we have made further progress this quarter. The CBA has been extremely active with all stakeholders as focus and intensity around the repurposing of spectrum gathers momentum. I believe the record clearly shows that our proposal remains the only one that appropriately balances the support to the 120 million U.S. TV and radio households with the need to quickly, efficiently and safely repurpose mid-band spectrum for 5G. I’m encouraged by the comments of the FCC Chairman who believes that there will be ‘results to show’ in the Fall.”

Collar’s quote refers to the World Radio Communications (WRC) 2019 conference taking place this fall in Egypt.