SES Global, the world’s largest satellite operator, had disappointing profits for 2002. Its profits declined by over 27 per cent to 204.5 million euros ($216.0 million) in 2002, compared to 280.3 million euros ($296.7 million) in 2001. The operator cited charges related to the acquisition of its U.S. subsidiary Americom as the reason for the decline.

While profits were down, SES Global’s revenues were “strong” given the “current conditions of the market place,” said CEO Romain Bausch. SES Global saw its overall revenues increase 38 per cent to 1.35 billion euros ($1.43 billion) in 2002, compared to 980 million euros ($1.04 billion). This reflects the increased revenues contributed by Americom, so a healthy increase was expected here. SES Global also managed to reduce its overall debt by 15 per cent, from 479 million euros ($507.1 million) to 2.66 billion euros ($2.81 billion).

SES Global’s revenue numbers in the second half of 2002 were lower than analyst estimates. Robert Peck, a satellite equity analyst at Bear Stearns, said in a research note: “SES Global fell short on our second half 2002 estimates across all key metrics, reporting revenues of 637 million euros ($677.4 million) versus our estimate of 696 million euros ($740.2 million) and EBITDA [earnings before interest, taxes, depreciation and amortisation] of 528 million euros ($561.5 million) versus our estimate of 558 million euros ($593.4 million).”

The operator’s SES Astra unit generated 675.4 million euros ($715 million) in 2002, compared to 739.5 million euros ($783 million) in 2001. This is a decline of just under 9 per cent. Bausch cited contract issues with Premiere in Germany as one of the main reasons for this fall. SES terminated a contract with the Kirch Group (Premiere’s former parent company) for 11.5 transponders, and renegotiated a new contract with Premiere directly for 7.5 transponders. Bausch confirmed there has been requests for extra capacity from Premiere, so the situation seems to be turning around for SES here.

The situation in Spain may not be as rosy for Astra. With the merger of Sogecable’s Canal Satelite Digital (CSD) and Telefonica’s Via Digital satellite platforms set to be concluded by the summer, either Astra or Hispasat is set to lose out. Via Digital had been using capacity on Hispasat satellites and CSD on Astra birds. While SES Astra has 10- year contracts with Sogecable, political pressure may favour Hispasat here, Bausch said. But he is “not giving up” regarding SES Astra’s position in Spain. He said SES Astra will still be in a “strong position” because its contracts are with Sogecable, the dominant player in the merger.

SES Astra is also introducing direct-to-cable broadcasting over its platform in Europe. Bausch confirmed the operator has received 291.5 million euros ($308.5 million) in insurance as a result of the loss of Astra 1K.

The operator expects continued difficulties this year. It expects overall revenues to decline, although Bausch believes it will only be a single-digit percentage decline.

SES Wraps Up SatLynx Talks

One of the other key challenges for SES Global in Europe will be ramping up revenues from its two-way broadband venture, SatLynx. Bausch confirmed that negotiations with Alcatel Space concerning its 20 per cent stake in SatLynx should be wrapped up in the next two weeks. He said the services “had developed quite well in the corporate segment” and that it had some “very interesting leads” with companies who want to offer two-way broadband services to businesses. Bausch remains optimistic for SatLynx’s prospects, saying the number of terminals sold in 2002 were “well-above” its initial expectations.

–Mark Holmes