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December 13, 2016 by Chris Forrester

Dec 12 2016, latest edition

Spacecom bought by Chinese?

Chinese telecommunications company Beijing Xinwei Technology Group is to buy Israeli satellite communications company, Spacecom, for US$190 million, according to Israeli press reports. Spacecom stresses that it has not entered into a definitive agreement.

The Chinese company had originally offered to pay $285 million for the satellite operator but that was prior to the Sept 1st catastrophic loss of its Amos-6 satellite when an engine test-firing of a Falcon 9 rocket went badly wrong.

The new price is some 50 percent more than Spacecom’s market capitalisation ($128m) on the Tel Aviv stock exchange, but one-third less than the original price offered.

The Sept 1 explosion meant that plans to place the Amos-6 satellite into Spacecom’s 4 degrees West orbital position had to be scrubbed. However, last week it emerged that Spacecom had leased a satellite from AsiaSat (AsiaSat-8) and this craft is being moved to the 4 degrees West position.

SpaceX delays. Loses Inmarsat contract

SpaceX will not be able to recommence launches this month. A statement says that the investigation team is finalising its work into its Sept 1st explosion. The company also says that the planned launch of a batch of ten satellites for telecoms company Iridium will not now take place on December 16, and slip into to early January.

As a result of the impact of these delays Inmarsat said Dec 8 that it had switched a launch from SpaceX to Arianespace. The decision also affects Arabsat-owned Hellas-Sat which forms part of the launch’s overall mission (as a ‘Condosat’ with Inmarsat).

Inmarsat says it will use an Ariane-5 heavy lift rocket to launch its ‘European Aviation Network’ S-band satellite, built by Thales Alenia Space in mid-2017.  Inmarsat stressed that it still has at least one contract still in place with SpaceX, for its Global Xpress Inmarsat-5 F4 craft, also due for launch in H1/2017.

SpaceX is still waiting for an FCC report on its investigation into a catastrophic explosion which destroyed a rocket and its Israeli-owned Amos-6 satellite on September 1.  SpaceX say that once the investigation work is wrapped they will then extensively test “to help ensure the highest possible level of mission assurance”.

 

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November 14, 2016 by Chris Forrester

Nov 14, latest edition

Trump win could be bad news for satellite

A weakened US$ will hurt some players

The results are in, and the people have spoken. But their voices could badly hurt many satellite operators if the falling value of the US dollar continues for more than a few days.

Equity analyst Giles Thorne of investment bank Jefferies, and a close observer of all things satellite related, put out a ‘flash’ note in the early hours of Nov 9th, and looked at three key factors in his comments: “In order of visibility, we consider: 1. A sustained weakening in the Dollar (a headwind for all names); 2. The extent to which satellite operators are seen as relative equity safe havens (probably less than in previous times); and 3. Policy implications (puts and takes differ from operator to operator).

His initial – admittedly ‘knee jerk’ – implication: “In times gone by, satellite operators have been seen as defensive growth and therefore net beneficiaries of a souring of equity sentiment. The Eutelsat profit warning in May dramatically questioned this defensive growth premise. While we remain constructive on the growth outlook, these names won’t be the beneficiaries of a spike in market risk-premia that they would have previously. What’s more clear cut is the impact of a sustained sell-off in the dollar – for Euro reporters Eutelsat and SES, this is a drag; for Dollar reporter Inmarsat it’s neutral for revenue but negative for EBITDA (22% of cost base is in Sterling) – its Dollar valuation / Sterling share price will also be a source of weakness.”

Certainly, the early share trading on Wednesday morning (Nov 9) seemed to confirm his anxieties: Eutelsat shares were down almost 2%, SES down 2.3% and AsiaSat down 1.5%, although all had recovered by Nov 10.

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November 1, 2016 by Chris Forrester

October 31st 2016 issue

SES: €8bn backlog. Video “accelerating”

SES reported Oct 28 that its Q3 numbers were in line with expectations, but reduced its full-year guidance dramatically (previous guidance was €2.010bn-€2.080bn) to the much lower €1.960bn.

SES said it was now carrying 7317 TV channels on its fleet, of which 2434 were in HDTV (33.3 percent).  SES says the growth of Ultra-HD channels accelerating and that it was now carrying 17 commercial UHD channels (this time last year it was just one).

Its recently acquired playout and TV facilities company RR Media (now part of MX1) meant that the overall business was now handling more than 2500 channels, and 120 VoD platforms around the world.

Revenues at SES topped €1.490 billion (down 0.6% at constant foreign exchange), and took the operator’s EBITDA down 4.1 percent to €1,061 billion. Its all-important backlog increased to €8 billion (up from €7.1 billion last year) and with the growth helped by the now consolidated RR Media (worth €100 million) and satellite constellation O3b (worth €300 million).

 

Eutelsat €5.4bn backlog. No growth until 2018-19

There’s a new sense of quiet optimism at Paris-based satellite operator Eutelsat, which on Oct 27 told analysts (during its Q1 results to Sept 30) that it was confirming its current financial objectives and reiterating its guidance for the next two years. The next two years will continue to be tough, but modest revenue growth should return by 2018-19.

A “company-wide” cost-saving programme is now underway and more detail on this will emerge in February at the next quarterly statement.

In terms of hard numbers, Q1 revenues were €385m (up 0.7% like for like) despite Video revenues falling 1.3% to €224.3m, and Data Services slipping -2.8% to €56.8m. Its Value-Added revenue stream grew a useful 8.3% to €29.4m but Government Services (another word for its Military bandwidth sales) fell back 10.7% to €47.1m.

 

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September 29, 2016 by Chris Forrester

October 3, 2016 issue

Sabbagh refutes damaging FT story

On Sept 22 the influential Financial Times published a piece that – in so many words – spelled ‘doom and gloom’ for the satellite industry as a whole, and suggesting that the “golden age” for satellite operators was well and truly over. The article linked the recent explosion at the SpaceX as “heightening a sense of dread across the industry” and that the satellite industry was in a similar position to that of the infamous ‘dot-com’ bubble of the late 1990’s.
The article propelled an immediate slump in the share prices of most of the major industry players. Eutelsat of Paris has fallen from €18.19 to €17.60 since the report. SES of Luxembourg has fallen back from €22.16 to €21.25 over the same period. London-based Inmarsat also suffered, dropping from 707p to 664p, although recovered 8% on Sept 27 to 688p.
Karim Michel Sabbagh, CEO at SES, issued a strong counter-argument Sept 27 to the what he described as an “oversupply” of [industry over-capacity] stories, and argues: “Maybe it is time to step back and think through some important questions.”

Robotic sat-servicing “ready to move forward”

Delegates to the American Institute of Aeronautics & Astronautics (AIAA) conference at Long Beach, California, heard considerable enthusiasm from speakers about the prospects for ‘Space Tugs’ and satellite Mission Extension Vehicles (MEVs).
Steve Oldham, SVP/strategic business development at Space Systems/Loral (SS/L) told delegates that the various technical, regulatory and financial challenges were being solved

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September 21, 2016 by Chris Forrester

Sept 19th 2016 Edition

SiriusXM: “Connected cars absolutely an opportunity”

Pay-radio operator SiriusXM is working hard to deliver tap into its subscriber’s vehicles, and drivers demand for additional services. CEO James Meyer, speaking at the Bank of America/Merrill Lynch Communications & Entertainment conference on Sept 15th, emphasised his enthusiasm from new services. Meyer also said he was looking to acquire businesses working in the vehicle telematics area, and had a target of seeing its system in 90-180 million vehicles.

“I see the connected car absolutely as an opportunity. For us it’s going to build capabilities into the vehicles [which] is going to have a profound effect both on our product and on the way we manage our subscriber lifecycles and the way our customers deal with us from a service and a care standpoint. So I believe connected vehicles are a huge opportunity for Sirius XM and that’s the way we’re going after that market. Obviously, there are other competitors that come with it. But I am less concerned with that and more concerned with how do we harness [connectivity] and make it great for us.”

Meyer was being interviewed by Jessica Reif Cohen from the bank, and he said that the pre-owned (second-hand) car market was now extremely important to SiriusXM.

Sat-building is $250bn of business

Euroconsult’s latest data on the value of the satellite construction industry says that over the next 10 years some 1450 satellites are due to be built, and with a combined value of some $250bn. According to the 19th edition of the report Satellites to be Built & Launched (over the next ten years), due to be published later in September, Euroconsult anticipates that 145 satellites with launch mass over 50kg will be launched on average each year by 2025 for government agencies and commercial organizations worldwide. When including satellites smaller than 50kg and the two mega constellations of OneWeb and SpaceX, the total would grow precipitously to 9,000 units (vs. 1,480 launched in the past ten years).

“Huge growth in satellite count does not automatically translate to a large market,” said Rachel Villain, Principal Advisor at Euroconsult and editor of the report. “As the price of the 7,550 future additional satellites is intrinsically low, the very reason for their existence, their market significance is small; they should represent no more than 8% of the $270bn to be spent building and launching the total of 9,000 satellites.”

The 1,450 satellites over 50kg to be launched over 2016-2025 should represent a market of $250bn for the space industry to build and launch. A price decrease is visible in this core market of the industry, driven by 11 commercial constellations using 370 small satellites to be deployed into low or medium Earth orbits for communications or Earth observation.

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