In spite of beating its 2010 estimates in both revenues and EBITDA, SES has lowered its revenue guidance for the next year. The satellite operator anticipates recurring revenue and EBITDA growth of approximately 3% in 2011 compared to 4-5% in 2010. SES…
In spite of beating its 2010 estimates in both revenues and EBITDA, SES has lowered its revenue guidance for the next year. The satellite operator anticipates recurring revenue and EBITDA growth of approximately 3% in 2011 compared to 4-5% in 2010. SES has also set its 3-year revenue CAGR (2010-2012) guidance at 4-5%, down from 5%.
The company said the reason for this adjustment was threefold. Firstly, the impact of satellite launch delays with both the QuetzSat-1 and SES-4 launches having been delayed by approximately three months. Secondly, the full year implications of the payload reduction on AMC-16 due to the health issues that began in spring 2010. And finally, the reversion of analogue transponders in Germany in the run up to the full analogue to digital switchover in the country in April 2012.
As of 1 January 2011, SES had 33 transponders delivering analogue transmissions into the German language markets.
Nine of the 33 transponders have committed customers, notably in Germany where five have been contracted by public broadcasters ARD/ZDF, while the remaining 24 are in the process of being remarketed.
In a results conference call, Romain Bausch, president and CEO of SES, pointed out that revenues should rise rapidly once the company’s new satellites are up and running. SES expects to launch a record six satellites in 2011 and a total of 13 by the end 2014, increasing its capacity by 23%, or 293 incremental transponders.
Bausch argued: “Most of these (2011) launches are towards the second half of the year and in particular those that are adding additional capacity. That is why you will not see this capacity adding a lot of revenues in 2011 but obviously they will deliver revenues on a 12 month basis from 2012.” In addition, SES expects its CapEx spending to be significantly reduced from 2012 to 2016 as the replacement cycle of the company’s fleet nears its floor.
For 2010, SES reported a 7.1% year-on-year rise in revenues to ?1.736bn, with EBITDA up 8.6% to ?1.296bn, giving the company a margin of 74.7%.
Tapping the burgeoning Asian market
In its results presentation, SES emphasised that emerging markets, and in particular Asia, would be a key driver to its future growth strategy. To that end, the company has ordered a new spacecraft, SES-8, to serve the Asian market.
The satellite, which is to be constructed by Orbital Sciences Corp and based on its STAR platform, is to be co-located with the NSS-6 satellite at 95E and is due to be launched in the first quarter of 2013. Its beams will be focused on South Asia (India) and Indo-China (Thailand, Vietnam, Laos) and is expected to mainly serve the burgeoning demand for DTH services in the region.
SES World Skies currently supplies capacity to the Indian market via four satellites, NSS-12, NSS-6, NSS-11 and SES-7.
Launched in 2002, NSS-6 currently has a fill rate of more than 95% and serves India’s largest satellite broadcaster Dish TV.
The company also recently signed a multi-year, multitransponder agreement with an unnamed Indian DTH provider for SES-7. The contract covers all 12 Ku-band transponders on the India beam of the spacecraft.
Located at 108.2E, SES-7 was formerly called ProtoStar- 2 and was purchased by SES at the beginning of 2010 for US$185m. The satellite carries 22 Ku-band transponders on switchable beams and 10 S-band transponders. The S-band payload is fully utilised by Indonesian DTH provider MCI Indovision.
As well as growing revenues in the emerging markets through increased capacity, SES is also considering potential bolt-on acquisitions.
Romain Bausch said: “Acquisitions are still possible but only small acquisitions targeting regional or local operators, particularly in Asia. We are not thinking about large acquisitions.
“We did not participate at all in the Telesat bidding process because we have an asset in North America. What we know from the process is that private equity is indeed very aggressive and I would not be surprised if this company will go into the hands of a private equity firm or a couple of private equity firms.” Meanwhile on the sales side, SES expects its sale of a majority 75.1% holding in German equipment provider and ground system integrator ND SatCom to EADS Astrium to be completed by the end of the first quarter 2011.
