Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SES SA (SGBAF, Financial) is tracking towards the top end of its 2024 outlook, supported by strategic wins and strong commercial momentum.
- The company reported a 3% year-on-year growth in networks revenue and a nearly 4% reduction in controllable OpEx, showcasing operational excellence.
- SES SA (SGBAF) secured EUR900 million in customer contracts, contributing to a gross backlog of EUR4.6 billion.
- The company maintains a sector-leading investment-grade balance sheet and returned EUR450 million to shareholders in 2024 through dividends and share buybacks.
- SES SA (SGBAF) is making progress with its Empire Meo constellation deployment and the regulatory process for the Intelsat acquisition is on track.
Negative Points
- The media business experienced a year-to-date decline of 5.5%, with expectations of a mid-single-digit decline for the full year.
- Fixed data revenue was down 7.4% year-to-date, impacted by periodic revenue from the previous year.
- Adjusted EBITA decreased by 2% year-over-year, despite improvements in trend compared to the previous year's decline.
- The company incurred EUR41 million in exceptional expenses related to restructuring and M&A costs.
- The insurance claim process related to Boeing is complex and progressing slowly, with no substantial settlements yet.
Q & A Highlights
Q: Given the better trends this quarter and raised guidance, is SES building more confidence in achieving organic revenue growth stability in 2025? Also, could CapEx for SES and Intelsat combined exceed EUR650 million towards the end of the decade? Lastly, can you break down the significant special items of EUR21 million in Q3?
A: Our confidence in achieving business stability and growth is high. We are focused on ensuring stability in 2025, and our guidance for the combined company is EUR600-650 million of sustained CapEx. The EUR21 million in special items primarily includes M&A-related costs and restructuring expenses, with the majority being M&A costs. – Adel Al-Saleh, CEO, and Sandeep Jalan, CFO.
Q: Regarding the recent wins with two large carriers, is there potential to extend partnerships similar to the maritime agreement with Starlink into aviation? Also, given the incremental capacity from mPower, should we expect growth in 2025? Lastly, can you update on the insurance process with Boeing?
A: Our open orbits offering is gaining traction, and we are in discussions with several airlines and aircraft manufacturers. We are confident in stabilizing the business and seeing a clear path to growth, though it's too early to provide 2025 guidance. Regarding the insurance claim with Boeing, we are making progress, but it is a complex claim and will take time. – Adel Al-Saleh, CEO, and Sandeep Jalan, CFO.
Q: Was the video improvement in Q3 due to strength in professional video or across the board? Also, regarding the RS SQUARED plans, when can we expect more details on CapEx and revenue streams?
A: The video improvement reflects strong fundamentals across the board, with sports and events showing double-digit growth. We expect to provide more details on RS SQUARED, including CapEx and revenue streams, in February during our full-year results announcement. – Adel Al-Saleh, CEO.
Q: Will capacity revenues from IRIS² start before 2030, and will the EU commission guarantee a minimum IRR level for your investment? Also, can you explain the technical differences between mPower and Starlink and their commercial relevance?
A: Capacity revenues from IRIS² will begin post-2030, but there will be milestone-based revenues before that. The EU commission will guarantee certain capacity revenues, and there are mechanisms to protect IRR. mPower offers a sophisticated multi-orbit solution with managed services, differentiating it from Starlink's standard model. – Adel Al-Saleh, CEO.
Q: Why does Starlink provide only a best-effort service without committing to an information rate? Is it due to strategic, commercial, or technical limitations?
A: Starlink's model is designed for standard solutions, which they scale effectively. While they may eventually offer service guarantees, their current model focuses on standardization. Our mPower constellation, however, provides sophisticated, customizable solutions with guaranteed service levels. – Adel Al-Saleh, CEO.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
