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.