Analysts Caught Off Guard by Steve Collar’s Sudden Departure from SES, Describe Timing as “Odd”

Photo: SES

SES’s announcement on Monday that Steve Collar is leaving his role as CEO means there will be huge change at one of the world’s biggest satellite operators. The timing of the announcement was interesting, given that SES has been in the middle of an aggressive launch campaign for its mPOWER satellites. It is not exactly a quiet period for SES.

Carl Murdock-Smith, a satellite equity analyst at Berenberg, called the timing of Collar’s departure “odd” in a research note issued June 13. He noted a weakness in SES’s share price on Monday and said there are three reasons the timing seems odd.

“O3b mPOWER is close to launching commercial service; C-band proceeds are close to being received; and SES’s statement on March 29 that it was in possible merger talks with Intelsat. One would think that Collar would want to stay to see the first two projects completed before leaving, while any merger talks with Intelsat would certainly be complicated by this change of management,” he wrote.

Murdock-Smith added that he believes the wording of Collar’s press release provides some comfort around the first two of these. He added, “Collar’s leaving quote said: ‘With O3b mPOWER launching, the company performing well and C-band all but delivered, the future is bright, and I wish the board and everyone at SES every success.’ If there was any material issue with either O3b mPOWER or the C-band clearing program, SES would not have included this sentence in the release.”

Investors are speculating on why Collar would leave, the analyst said. “Speaking to investors on Monday, one common theory was that the departure might be related to the merger talks with Intelsat. Collar has repeatedly argued the case for industry consolidation, and several investors yesterday questioned whether his departure could be linked to a disagreement with the board on whether to proceed or not. We think there would be significant, albeit long-dated, synergies from a merger of the two companies’ GEO constellations, but obviously the terms of any deal would be very important, particularly if using SES equity at a time when the valuation is depressed,” Murdock-Smith wrote.

Ivan Suarez, director of Space & Spectrum Policy at Access Partnership told Via Satellite he would be lying if he said he expected Collar’s departure. He added, “Steve’s long history at SES for over 20 years has undoubtedly correlated to the company’s leadership position. At the time of comment, we do not know who will be replacing Steve for the long term, however since CTO Ruy Pinto will be interim CEO, the transition will be smooth. As a whole, market movements have not indicated any panic and all assumptions would indicate SES’ current projects will continue to move ahead. We will be monitoring how the market responds with interest.”

Over the last year, talk around a potential deal with Intelsat has heated up. Despite speculation, there has been no deal. So, could  we now see that deal taken up by Collar’s successor?

“Certainly, it makes a lot of business sense especially considering the backdrop of consolidations that the industry has seen over the past two years,” Suarez said. “Joining the bandwagon would give the two combined companies enough leverage and capacity to compete not just with other satellite firms which previously announced their own deals, but also with new deep-pocketed giant constellation systems. In the case of SES and Intelsat, combining their respective networks of GSO satellites with SES’s MEO system would create a strong, formidable network of multi-orbit satellites that would certainly enhance their global servicing capabilities for the tandem.”

There are some interesting elements from Monday’s press release. Notably, Ruy Pinto, the company’s relatively new CTO, will take the lead as interim CEO — not JP Hemingway, SES’s chief strategy officer, and the former CEO of SES Networks. It also remains to be seen whether SES will appoint someone from outside of the industry, similar to what Eutelsat did recently with Eva Berneke.

Of course, Berneke wasted no time pulling the trigger on the deal to acquire OneWeb. Could history repeat itself?