SES Sees Strong 2008, 2009 Growth Despite Economy

As an infrastructure business, SES isn’t affected directly by consumer behavior, Bausch said. Of the company’s three businesses, media is a more important revenue source than enterprise and telecom, or government, he said. Media consumption probably will be affected by the downturn but no one knows how much, Bausch said. Consumers may spend more time watching TV in hard times, he said. SES doesn’t expect customers’ projects to change dramatically, though their timing could be affected, Bausch said. Some telecom providers may have problems in a recession but that’s a small part of SES’s business, he said, and the government business doesn’t go up and down with the economy.

European lack of interest in DVB-H TV could hurt SES because of its joint venture with Eutelsat in Solaris Mobile, which earlier this month bid to run a pan-European mobile satellite services system, Bausch said. There is “a lot of confusion” about the speed and success of mobile TV’s European roll-out, he said. But the satellites are designed for other uses, including mobile communications, safety and security and automobile, so Solaris’s success doesn’t depend solely on mobile TV, he said.

The EU plan for authorizing mobile satellite services systems is under attack by ICO Global Communications in the European Court of First Instance. ICO terms the plan illegal, a spokesman said. SES, following the case closely, has had no indication from the European Commission that the timing for handling applications will change, General Counsel John Purvis said.

SES recurring revenue was 1.186 million euros in the first nine months of 2008, and recurring EBITDA 846 million euros, for a net profit exceeding 338 million euros, Rigolle said. “Recurring” measures underlying revenue and EBITDA performance by, among other things, removing currency exchange effects, SES said. Sept. 30, 821 of the company’s 1,058 commercially available transponders were under contract, a 77.6 percent utilization rate, it said. SES confirmed its 2008 guidance and said it expects more than 5 percent growth this year. It predicted 4.5 percent for 2009. SES is well-financed through next year, Rigolle said.

SES’s satellite construction program still mainly aims to promote the company’s businesses through continued investment, Bausch said. Ten satellites are in the pipeline for launch through 2011, Bausch said. ASTRA 1M takes off the first week in November and Ciel-2 early in December, he said. Four will launch in 2009, two in 2010, and two in 2011, plus an AMC ground spare, adding 293 transponders for a 28 percent rise in commercially available capacity, he said. SES this year announced solar-array circuit anomalies on some Lockheed Martin A2100 satellites, cutting commercial capacity on two satellites. Since then circuit failure has knocked out six transponders on AMC-6 but didn’t affect revenue because the capacity wasn’t being used, Bausch said.

Officials were asked whether SES will use the Ka-band in Europe, considering competitor Eutelsat’s decision to launch KA-SAT for consumer broadband services in 2010. SES will monitor the market and add additional capacity, Ku or a Ku-Ka hybrid, as needed, Bausch said, but it’s unlikely to invest in Ka-band alone.

Strong satellite operator lobbying for recognition of the ITU role in spectrum allocation in revised EU e- communications rules (CD Oct 10 p7) seems to be working, Bausch and Purvis told us. The European Parliament and Council of Ministers both appear to favor a more pronounced reference to the ITU than the EC, Bausch said.