SES impresses

Chris Forrester

Satellite operator SES delivered a solid set of half-yearly numbers on July 31 (covering the period to the end of June) impressing analysts with its highest-ever EBITDA margins, a rock-solid order book (worth 4 times its 2008 revenues) and an extremely rosy picture of the way Europeans are buying into HDTV.

SES said a steady set of contract ‘wins’ meant that its fleet utilisation, even though it now comprised 1100 transponders, had expanded from 79.6% to 80.5%, or the equivalent of 886 filled transponders.

SES’ president and CEO Romain Bausch explained that a decision would shortly be made on how Solaris Mobile would be replaced. Solaris Mobile is the j-v with Eutelsat that had hoped to cover Europe with S-band video and radio signals. Its giant antenna is not working to specification and a full insurance claim has been made, said Bausch.

A decision on whether to build another ‘add-on’ S-Band cargo to a suitable flight, or perhaps even to go for a dedicated S-Band satellite, will be made by year-end. Meanwhile, there is some life in the Solaris project and certain services will be introduced, thus securing Solaris’ license to operate.

Bausch said SES would be closely looking at the ProtoStar pair of satellite assets now in Chapter 11 bankruptcy.

High-definition television is also expanding its demand. SES’ European fleet was carrying 78 DTH channels in HD at the end of the period, while its SES Americom division was also looking after 78 channels (70 on its HD-Prime neighbourhood, and another 8 on New Skies craft).

Bausch reiterated SES’ commitment to its HD+ service for the German market. More detailed plans for the project will be unveiled at IFA later this month.

Revenues, and EBITDA earnings were all robust although helped by an improved US Dollar exchange rate. SES’ expectations for the rest of this trading year are good, with guidance raised as to its EBITDA margins from ‘around 82%’ to ‘above 82%’. The generic power loss problems on the Space Systems/Loral-supplied satellites in the Americom fleet seems to have stabilised.

One analyst (Petercam) reiterated its view that SES is trading at too large a discount compared with Eutelsat, and suggested a target price of €16.70 for SES’ stock.

SES key numbers:
• Revenue rose 7.0% to €843.4 million
- Recurring revenue up 2.0% to €843 million
• EBITDA of €607.0m was 10.3% ahead of the prior year period
- Recurring EBITDA rose 4.7% to €619m
• EBITDA margin improved from 69.8% to 72.0%; increase driven by industry-leading infrastructure EBITDA margin of 83.9%
• Operating profit rose 9.2% to €359.9m
• EPS rose to €0.63 (2008: €0.59)
• Net Debt/EBITDA at the period end stood at 3.16 times
• Contract backlog increased by 11.6% to €6.5bn