SES and Eutelsat “spooked” by Sky over-reaction
It doesn’t take much for investors to hear from Sky that it is launching a non-satellite service next year to have them selling their satellite shares. SES’ share price tumbled 5.7%, and Eutelsat (which beams Sky Italia channels to subscribers) fell back 2.3% Jan 26 on the news.
However, had investors listened to Stephen van Rooyen (Sky CEO) as well as Jeremy Darroch (Sky Europe’s CEO) carefully they would have heard them admit that Sky has a large digital satellite base who they do not see moving. Indeed, it is widely held that in one of the upcoming centuries homes might well enjoy fibre to the premises, but until that day happens then satellite is the very best there is at delivering ‘one-to-many’ TV services.
Of course, a cable or DSL service might well pick up multi-occupancy dwellings in urban apartment blocks or residential premises where dishes are forbidden or discouraged and this is good for Sky (and Canal Plus, and any other satellite pay-TV operator). Sky suggested that some 2m UK homes and another 6m or so across Europe could benefit from their dish-less solution.
“Above peer growth” for SES in 2017
SES’s senior management have been on a series of financial road shows and the results are now emerging in the form of advice to clients from equity analysts at the investment banks.
One, Macquarie , in a very bullish report says that last year’s addition of speciality satellite operator O3b fully into the SES family, as well as the purchase of Israeli-based RR Media (and combining it with SES Platform Services into MX1) means that this year SES will deliver “above peer” growth of some 8 percent. However, the note also warns that growth in SES’ all-important video growth will be flat despite the addition of a couple of new satellites.
“A new long-term deal with Canal+ will likely improve video growth and allay fears the customer was going to cut transmission costs. We expect RR Media to contribute roughly €166m but add little growth to the segment,” added the bank’s note, which set a target share price of $21.