EU – Baltic States, Technology, Telecomunications
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Friday, 26.04.2024, 00:11
SES full year 2019 results
Finally, SES
announced its support for the landmark decision taken by the U.S. Federal
Communication Commission to enable 5G operations in a portion of the C-Band and
deliver a win-win-win solution that has been the focus of all stakeholders
since this process began almost three years ago. This decision will accelerate
5G leadership in the US, protect critical broadcast customers and
neighbourhoods and deliver substantial value to SES’ shareholders.
Key Highlights
• Group revenue
of EUR 1,983.9 million down 1.3% as reported (-3.8% YOY at constant FX)
• Group EBITDA of
EUR 1,216.6 million down 3.1% as reported (-5.5% YOY at constant FX)
• Net profit
attributable to SES shareholders of EUR 296.2 million up 1.3% as reported
• Net debt
reduced by 5.8% (YOY) with net debt to EBITDA of 3.22 times in line with SES’
commitment to Investment Grade
• Free cash flow
before financing activities of EUR 826.3 million (2018: EUR 870.5 million)
representing 41.7% of group revenue
• A proposed
dividend per A-share of EUR 0.40 in view of the short-term investment peak in
2021 and fully covered by 2019 earnings
• 2020 financial
outlook (revenue of EUR 1,920 - 2,000 million and EBITDA of EUR 1,150 - 1,210
million) reflects a more prudent view of revenue development in Video and a
somewhat lower trajectory of growth exiting 2019 in Networks
• Next phase of
strategic transformation launched that includes consideration of the potential
separation of Networks business within SES and EBITDA optimisation of EUR 40 -
50 million annually from 2021 onwards.
Steve Collar, CEO, commented: “We are satisfied with our 2019
financial results with EBITDA, net debt to EBITDA and CapEx metrics all in line
with the outlook provided last February. Revenue was slightly below our
expectations as we missed one important contract on the Video side but
continued strong focus on discretionary spending ensured that we met our
important EBITDA targets.
With growth of 4.5%,
and more than 20% in the last two years, SES Networks continues to expand on
the back of strong growth in the Aeronautical, Cruise and Government segments
while, in Fixed Data, we signed and deployed several important connectivity
networks that will contribute to future growth in 2020 and beyond.
With O3b mPOWER a
little over one year away from first launch, we have made great progress in
building our seamless, cloud-enabled, automated, multi-orbit global network
partnering with Microsoft, Amdocs and Kythera. Pleasingly, we signed our first
three O3b mPOWER customers with Carnival Corporation’s Global Experience and
Innovation team extending multi-orbit operations to all Princess Cruise Line
vessels, as well as agreements with Orange in Africa and a second telco to
leverage the unique backhaul capabilities of O3b mPOWER.
Our Video
business continues to respond to the ongoing evolution in media consumption
with DTH and cable customers ‘right-sizing’ capacity leading to a decline of
7.8% in underlying revenue. Despite this, our technical reach grew to over 365
million households in 2019 and we now carry 3,000 HD and UHD TV channels to
audiences around the world. Our updated FY 2020 outlook incorporates a more
prudent view of revenue development in Video and a somewhat lower trajectory of
growth exiting 2019 in our Networks segments.
The proposed
dividend of EUR 0.40 underscores our continued commitment to maintaining SES’
Investment Grade credit rating, providing an attractive return to shareholders
while supporting the short-term investment peak in our fast-growing, highly
differentiated Networks business. We believe that we have established a unique
and non-replicable value proposition within our Networks business with
verticals such as Aeronautical, Cruise and Government offering strong growth
opportunities that demand focus and scale. Accordingly, we are undertaking a
programme of transformation that includes the consideration to separate our
Networks business within SES and potentially provide it with access to external
capital.
Finally, we are
delighted to express our support for the plan that FCC Chairman Ajit Pai
announced last Friday to repurpose a portion of the C-Band for 5G operations in
the United States. This is a win-win-win outcome that we have worked tirelessly
towards for almost three years. Our focus now is in working diligently with our
customers to protect and enhance our services to the nearly 120 million
households that rely on our satellites for distribution through the largest and
most complex spectrum repurposing effort ever undertaken. The resulting
accelerated relocation payments will be used to enhance value through pragmatic
deleveraging, targeted investments focused on our fast-growing Networks
business and return to our shareholders.”
Simplify and Amplify
Today, SES
announced the launch of the next phase of strategic transformation to position
itself for future growth and deliver maximum value to customers and
stakeholders. The programme, called Simplify and Amplify and executed
throughout 2020, comprises a series of strategic actions to enable SES to best
deliver against its declared purpose of doing the extraordinary in space to
deliver amazing experiences everywhere on Earth. It is the next phase in a
process that began in 2017 when SES first established distinct units for its
video and data businesses. The programme comprises four major initiatives:
• Create Pure-Play Verticals: SES will
investigate the creation of two ‘pure-play’ market verticals through the
potential separation of its Networks business within SES in order to drive
strategic and operational focus, provide increased external visibility and to
appropriately configure SES’ overall business for the future. Consideration
will include an analysis of a separate capital structure for the Networks
business, potentially providing it with access to external capital to
accelerate growth and build on the unique value proposition that has been
established in the market. This structure also would facilitate a sharp focus
on the cash generating and value sustaining priorities within SES's
market-leading video business, leveraging its premier direct-to-home (DTH)
neighbourhoods and superior global reach.
As a result of
the recent adoption by the U.S. Federal Communications Commission (FCC) of its
order regarding the repurposing of part of the C-Band spectrum, SES is putting
in to place a dedicated team to execute on the most complex and demanding
spectrum repurposing ever contemplated. This team will leverage the company's
in-house expertise to ensure a seamless process that meets the critical needs
of its current customers as well as the FCC's desire to enable 5G leadership
for the United States on an accelerated timeline. This is a transformational
opportunity to protect SES’s neighbourhoods and current customers, support the
nearly 120 million U.S. households that rely on the C-Band for their cable and
broadcast programming, and create shareholder value for SES.
• Focus on Core Strengths: The markets in
which SES operates have become both more resource intensive and the subject of
technological disruption. SES will focus its capabilities and offerings across
each of its markets on profitable segments that play to the group's core
strengths, doubling down where it makes sense to do so, while exiting, reducing
exposure to, or establishing alliances and partnerships to serve, other market
segments. This will result in a stronger, more focused SES with world-leading
products and solutions in the areas where it excels.
• Simplify Operations: SES expects to
realign its resources to support the above initiatives, to simplify operations,
maximise efficiency, and make SES easier to do business with. Activities will
include the consolidation and reorganisation of some functions to reflect any
changes in business scope and structure. In addition, the company plans a
comprehensive review of its global footprint. Overall it is expected that SES
will generate EBITDA optimisation ramping to EUR 40 - 50 million annually from
2021 as a result of this focus on core strengths and simplification of its
business.
• Innovate for the Future: SES will
deepen its commitment to innovation to drive the customer solutions demanded in
the market today and in the future. SES has led the industry in the development
of low-latency NGSO and now multi-orbit architectures along with the
integration of network functions and automation. This further commitment to
innovation will broaden SES’s leadership in cloud integration through the
development of a "cloud practice" focused on creating and driving
cloud scale across all target market segments. In addition, the company intends
to establish an innovation hub to co-create and incubate solutions together
with customers and partners, and develop new technologies and business models
through corporate venturing.
About SES
SES has a bold
vision to deliver amazing experiences everywhere on earth by distributing the
highest quality video content and providing seamless connectivity around the
world. As the leader in global content connectivity solutions, SES operates the
world’s only multi-orbit constellation of satellites with the unique
combination of global coverage and high performance, including the
commercially-proven, low-latency Medium Earth Orbit O3b system. By leveraging a
vast and intelligent, cloud-enabled network, SES is able to deliver
high-quality connectivity solutions anywhere on land, at sea or in the air, and
is a trusted partner to the world’s leading telecommunications companies,
mobile network operators, governments, connectivity and cloud service
providers, broadcasters, video platform operators and content owners. SES’s
video network carries over 8,300 channels and has an unparalleled reach of over
355 million households, delivering managed media services for both linear and
non-linear content. The company is listed on Paris and Luxembourg stock
exchanges (Ticker: SESG). Further information is available at: www.ses.com.
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