SES: A year of Purgatory ahead
Dividend remains, but slashed by 40%
It was another sign of how serious matters were for the SES end-of-year results that company Chairman Romain Bausch – who was previously the company’s president and CEO – was required to help with the presentation, and with an opening statement to help calm the markets.
Bausch said that the departing CEO Karim Michael Sabbagh was leaving to join a new technology venture, while CFO Padraig McCarthy was retiring. Bausch explained that because the decision on the CEO and CFO were “price sensitive” as far as the market was concerned they had to be announced “without delay”. He said that having worked with Steve Collar (CEO-designate) and Andrew Browne (CFO-designate) for many years he and the Board had full confidence in their abilities. Both outgoing CEO and CFO will stay in post until April.
Bausch said the reduction of the dividend, by 40% to 80c per share would strengthen the company’s balance sheet but would remain progressive. “We are deeply aware that it has been a difficult period for our share price and that it is a challenging time for the industry. The best way to build the share price is to deliver on the execution of our strategy and to improve our performance and to maintain clear communications with the Capital markets.”
Eutelsat on track for better 2018-19
The market loved what it heard
At first sight Eutelsat’s half-year results (reported Feb 16th, to Dec 31st) were poor, with revenues of €697m being down 5.7% on the same period last year and on like-for-like trading. The numbers extend to Eutelsat’s usually buoyant backlog of contracts in place, but this has tumbled 11.4% (from €5.3bn to €4.7bn) which is something of a worry.
Nevertheless, the market listened closely to CEO Rodolphe Belmer’s narrative, and gave the operator a definite ‘thumbs up’ in terms of his ‘matter of fact’ defence of the industry and satellite DTH in particular. He told analysts that everywhere on the planet – except the US – satellite numbers were growing, not falling. He didn’t quite say that ‘reports of satellite’s death are exaggerated’ but that was the underlying message.
The market seemed to agree, and sent Eutelsat’s shares rocketing more than €2 to €19.03 (up 12.17%) on the day and helping lift SES (up 5.19%) and Intelsat (up 9%) at the same time.
Intelsat falls 12% on low forecasts
Intelsat’s 2017 results were not that different from its two giant competitors, SES and Eutelsat. Each of the three know they are in for a tough year ahead with – at best – flat prospects, and bandwidth contract renewal prices under pressure.
However, Intelsat’s stock price is always highly volatile and its Feb 26th results disappointed the market which drove its share price down 11.9 percent (and 14.7% at one point on Feb 26th) following CEO Steven Spengler’s results update on trading to Dec 31st 2017 and admission that the upcoming year would see revenues in the $2.06-$2.11 billion range, which is down on 2017’s revenues of $2.149 billion.
In terms of its financial performance, Q4 revenue was $538 million, a decline of 2% (to Q4/2016).
Intelsat’s losses were also higher than the market expected. Spengler was more optimistic that Intelsat’s important government business was returning to health, and that renewal business for this year was likely to be better than in 2017.