SES Chooses Not to Split Networks Business

SES offices with antennas. Photo Credit: SES

SES’s results were a mixed bag on Thursday with good news in terms of overall revenues, but profits seeing a significant fall. In the nine months to the end of September, the operator achieved revenues of 1.41 billion euros ($1.65 billion), which was virtually the same as what it achieved in 2019 during the same period. However, its net profits for the period saw an almost 40% fall at 154 million euros ($180 million), down close to 100 million euros compared to the same nine months last year.

SES said the reduction in net profit reflected the combination of the lower reported EBITDA, including the restructuring and C-band expenses, and net foreign exchange losses compared to the same time period in 2019.

For the nine months until the end of September, Video accounted for around 832 million euros ($972.9 million), which was an 8% decrease compared to the same stage last year. Video now accounts for less than 60% of SES’s overall revenues.

The Networks side of SES’s business which continues to show strong progress, and SES announced that the board has decided not to pursue a separation of Networks within SES at this time, an idea that was floated earlier this year. In the nine months to the end of September, the Networks business generated around 577 million euros ($674.8 million), a 6% increase compared to the same stage last year. Networks now accounts for over 40% of SES’s overall business as it gradually moves to a 50/50 split between Video and Networks.

Within the Networks business, mobility remained strong. For the nine months to the end of September, it accounted for 170 million euros ($198.8 million), up over 13% compared to the same stage last year. Fixed Data revenues in the nine month period reached 191 million euros ($223.4 million), an over 6.5% increase compared to the same stage last year.

“Our solid performance continued into the third quarter, despite ongoing COVID-19 headwinds, with sustained growth across Networks and stable revenue quarter-on-quarter in our Video business. We were delighted to announce a substantial extension of our relationship with Canal+ across three orbital locations and valued at over 230 million euros ($269 million), as well as a meaningful extension of our strategic partnership with Microsoft as an Azure Orbital connectivity partner and satellite partner for Azure Modular Data Centers,” said Steve Collar, SES’s CEO. “We took measures early in the development of the COVID-19 pandemic to protect the bottom line and the benefits of these cost-saving measures are reflected in our resilient Adjusted EBITDA performance. Execution remains the priority with the business well placed to deliver on our full year outlook.”

The results were met positively. Giles Thorne, a satellite equity analyst at Jefferies said in an initial research note posted this morning, “A good set of Q3 results is another building block of rehabilitation for SES. The 3Q20 results were good with revenue/EBITDA both ahead of consensus (+2% / +4% respectively). C-band is transition fully on track. The Networks strategic review completed and the decision is not to separate the business.”