FSS operators SES and Eutelsat outlined plans in their financial results this week to expand further into emerging markets with new satellites in 2015.
Both operators are continuing to experience strong demand for video and data in emerging regions and…
FSS operators SES and Eutelsat outlined plans in their financial results this week to expand further into emerging markets with new satellites in 2015.
Both operators are continuing to experience strong demand for video and data in emerging regions and both are seeking to increasingly leverage on these areas as a source of future growth.
Unveiling FY 2012 results on 31 July, Eutelsat CEO Michel de Rosen announced plans to launch a high powered bird in 2015 called Eutelsat 8 West B, which will be used to capture demand in Middle East and Africa.
“We are in the market to procure the West B satellite to address the prime 7W and 8W DTH neighbourhood covering Middle East and Africa,” said de Rosen.
He added that customers in this region will be served a year before West B is eventually placed, because the operator plans to move an existing in-orbit satellite to the location.
In SES’ H1 2012 results call on 30 July, CEO Romain Bausch fleshed out early plans for up to four new satellites in Latin America and Asia – between one and two in each region – in 2015-2017.
“We have not yet decided to invest in any additional satellites, but you can expect an announcement to come in the next month,” said Bausch.
As for growing their businesses through M&A, both operators said they were evaluating regional opportunities, but stopped short of any transformational or sizeable deals.
Back in June, Eutelsat answered a long-running call from some investors to use its available cash for non-transformational M&A, when it proposed buying the Asian GE-23 satellite from GE Capital for US$228m as part of its Asia-Pacific push.
However, de Rosen stressed that organic growth would remain a priority for the company, with inorganic treated as a “supplement”.
“When we look at inorganic, we look for targeted, focused and valuation creation opportunities,” he said.
To this end, he said acquiring Greek satellite operator Hellas Sat, which is widely expected to be put up for sale later this year, would be consistent with Eutelsat’s strategy.
SatelliteFinance understands that Eutelsat has been eyeing the asset for a while, but this is the first time the company has publically declared bidding interest.
In remarks that could mean a bidding war is on the cards for the Greek sale, Bausch also reaffirmed SES’ interest in acquiring Hellas Sat in his results conference call.
Bausch said the company considers potential acquisitions that would generate an IRR that is at least as good as it expects from organic investment programmes, generally 10-15%. But, apart from “regional opportunities we refer to from time to time”, the only sizeable acquisition he sees on the horizon is SES’ option to increase its 46% stake in nascent satellite operator O3b Networks.
SES has the ability to acquire a controlling stake in O3B, which it sees as key to its emerging markets expansion, but Bausch said it would not trigger this option until the company de-risks.
He told investors that a route to control would not be triggered until “O3b satellites have been launched, will be in service, and will have demonstrated technical and commercial viability, and so this is not likely to happen before 2014/2015”.
For the six months to 30 June 2012, SES reported a 4.8% jump in revenue to €891.9m, compared with the corresponding period last year. H1 2012 EBITDA increased 5.3% over the prior year to €665.1m. SES posted a closing net debt/EBITDA multiple of 3.07.
For the year to 30 June 2012, Eutelsat posted revenue up 4.6% to €1.2bn, compared with last year. FY 2012 increased 3.3% over the prior year to reach €957m. Eutelsat posted a closing net debt/EBITDA multiple of 2.48.
