Satellite operator SES has included the anticipated receipt of $3.97 billion into its forecast accounts and coming its way as a result of the FCC’s C-band restructuring order — the first batch of cash will come into the company from “mid-2021..
SES confirmed it is buying four more O3b/mPower satellites, which will result in a 90 percent increase in O3b’s throughput.
SES unveiled its Q2 numbers (to June 30th) which admitted the company was not immune to the impact of the Covid-19 virus and consequent lockdowns. “We anticipate a slowdown in the pace of new business in the second half of the year and have updated our financial outlook for the full year in view of the challenges faced by a number of our customers, particularly in Mobility and Sports & Events. We were quick and early to initiate exceptional one-off cost reduction measures of €40 – 60 million for 2020 to mitigate the impact of Covid-19 on our bottom line and are tracking well against this target,” said SES.
The company’s far-reaching ‘Simplify and Amplify’ cost-savings programme is now well underway and it has closed offices, reduced staffing and made other cost reductions that will result in €40 million-€50 million of savings from 2021 onwards.
SES also confirmed the retirement of Romain Bausch, once CEO and more recently chairman of the company, who stepped step down from the Board of Directors in July.
The high spot in terms of divisional performance was its ‘Networks’ segment (now 41 percent of group revenue), up 7.1 per cent y-o-y and the third successive year of growth. ‘Mobility’, a sub-set of Networks, grew 22.6 per cent y-o-y.
However, Video, the backbone of the company because of its DTH contract, fell badly by 8 percent “from ‘right-sizing’ of capacity by customers in mature markets, and the decision to reduce exposure to low margin video services activities contributing to lower Services revenue (-9.6 percent),” said SES.
Fully protected contract backlog at June 30, 2020, was €5.9 billion (gross backlog of €6.4 billion when including backlog subject to contractual break clauses).
Executive Comment
Steve Collar, CEO/SES, said, “The business has performed well in the first half of the year, delivering solid revenue in challenging trading conditions, while the benefits of the proactive cost-saving measures that we took early in the development of Covid-19 are also seen in our H1 results. We were particularly pleased to sign a broad distribution agreement with BBC Studios during the quarter, underlining our ability to support premium customers across a range of satellite and terrestrial distribution methods as well as significant extensions with ProSieben in Germany and Austria. On the Networks side, we are seeing a pickup in our Government business after a slower first half, with a new and innovative use of the O3b constellation for the US Government among a number of important deals won and signed in the second quarter.”
Additionally, Intelsat’s Q2 results, to June 30th, were not impressive, as the company is in Chapter 11 bankruptcy reconstruction as a ‘debtor in possession’ and it is near-certain that it will exit bankruptcy in a stronger position; however, at the moment, the negative news is extensive.
For example:
- Network Services (worth 37 per cent of Intelsat’s total revenues) fell 5 percent to $176.7 million.
- Media (42 per cent) fell a worrying 9 per cent to $202.6 million.
- Government (20 per cent) rose a useful 3 per cent to $96.1 million.
The changes contributed to a total of $482 million in revenue (down 5 percent), but a net loss of $405.4 million for the quarter. However, the loss was ‘better’ than that incurred a year ago which was $529.7 million (Q2/2019).
The company spent $298.7 million on reorganisation connected with its Chapter 11 position.
Intelsat’s CEO, Stephen Spengler, said, “Our business demonstrated resiliency in a challenging operating environment, highlighted by a sequential quarterly increase in revenue and Adjusted EBITDA largely from the successful execution of a new agreement with Speedcast in our network services business. Financial results, when compared to the same period last year, reflect the ongoing challenges in our network services business due to the impacts of COVID-19 on cruise in maritime and aeronautical in mobility, despite our booking new business in merchant maritime and enterprise network applications. The decline in the media business was driven by ongoing secular headwinds that we have experienced over several quarters. Finally, the government services business delivered year-over-year growth in revenues resulting from strong uptake of third-party services and growth in our new FlexGround managed services.”
Spengler said that Intelsat would be delivering further comments to the FCC next week (on August 14th) as to its C-band transition plan.
Intelsat’s fill rate was 75.1 percent (down on the previous quarter’s 78.5 per cent) and contracted backlog was down $200 million to $6.4 billion.
The preceding news items were posted by journalist Chris Forrester
at the Advanced Television infosite.
