SES carrying 6526 TV channels

SES’s Q1 results were revealed on April 30th with CEO Karim Michel Sabbagh saying the satellite operator had made a “productive start” to 2015. He said that SES was now serving 312 million homes worldwide, up 7 per cent on a year ago. SES was now transmitting 6526 channels, up 5 per cent y-o-y, and helped by a 6.8 per cent growth in HD channels (to 1910).

However, revenues were under pressure. Group revenue for Q1 rose by 3.2 per cent to €356.1 million. But strip out foreign exchange fluctuations and the benefits of a stronger US dollar, and instead express revenues at a ‘constant’ rate and its revenues fell 4.9 per cent.

European revenues fell back 5.3 per cent to €241 million and also additionally affected by the outright sale of 4 transponders to Eutelsat a year ago (and not repeated this year).

North American revenues however, for some time the poor relation as far as growth was concerned, have improved but again the growth of 8.2 per cent (to €91.1 million) is disguised by the strength of the dollar. Expressed at a constant FX rate and its revenues were 8.4 per cent. SES said that “renewals of capacity agreements on AMC-15/-16” were lower.

But set against these two disappointing sectors Sabbagh said that its ‘International’ division showed real growth, up 14.8 per cent to €145.7 million.

Overall, SES is operating 1500 active transponders, down a fraction due to fleet movements and the transition of NSS-7 to operation in an inclined orbit. Excluding NSS-7, new business secured contributed to growth in both Europe (up 14 net) and International (up four net). This offset a further reduction in North America (down 17 net) arising from reduced capacity requirements of certain customers, including EchoStar on AMC-15. Fleet utilisation is also down a fraction, from 72.5 per cent a year ago to 71.4 per cent at the end of March.

During the first quarter of 2015, SES ordered three new satellites (SES-14, SES-15 and SES-16/GovSat) to drive future growth. The future launch schedule now comprises seven satellites, which will add a total of 180 net transponders by end-2017. The addition represents a 12 per cent increase in the current available capacity, of which a significant proportion is already pre-committed. In addition, three satellites (SES-12, SES-14 and SES-15) will provide a total of 36 GHz of HTS capacity to serve a range of Next Generation Data (NGD) applications, such as Mobility.

Sabbagh confirmed that SES-9 will launch during Q3 this year but take between 4-6 months to get to orbit, and thus will be slower to generate revenues as a consequence.

Investment bankers Exane/BNP-Paribas, in a blunt note to clients recommended investors switch out of SES into Eutelsat. Eutelsat will report its financials on May 12th.