Half year 2017 results: Solid performance on execution of SES’s differentiated strategy



SES S.A. announced financial results for the six months ended 30 June 2017.

Delivering return to growth in revenue and profitability

  • Revenue EUR 1,048.7 million, up 9.6% over prior period (down 1.5% like-for-like)

  • EBITDA margin 65.5% and operating profit margin 29.2% (H1 20161: 66.4% and 31.3% respectively)

  • Net profit attributable to SES shareholders of EUR 275.5 million, up 21.2% over prior period

  • Net debt to EBITDA ratio 3.24 times (H1 2016: 2.03 times), in line with SES’s financial framework

  • Substantial contract backlog of EUR 7.5 billion (H1 2016: EUR 7.3 billion)

Improving trend in SES Video and strong growth in SES Networks delivers stable verticals development

  • Improving trend in SES Video with Q2 2017 at -1.9% (YOY), compared with Q1 2017 at -4.2% (YOY)

  • Stable outlook for SES Video, excluding short-term impact of launch schedule and satellite health changes

  • Improved business mix and differentiated solutions driving 7.5% (YOY) growth in SES Networks

  • Development agreement signed with Boeing to deliver next generation technology innovation

Karim Michel Sabbagh, President and CEO, commented: “SES continues to make a positive start to 2017 and is well positioned to generate sustained growth and improving returns. SES Video continues to deliver differentiated services and enhance the viewing experience, with the proportion of integrated solutions nearly doubling versus last year. The improving trend in Q2 2017 underpins our stable outlook for 2017 before the temporary impact of changes due to launch schedule and satellite health, which are expected to result in a slight decline. SES Networks’ distributed network capabilities are driving strong growth across our data-centric verticals, expanding with global fixed data, aeronautical, maritime and government clients. The development agreement, signed today, with Boeing is the latest milestone in delivering next generation technology that will form the basis for SES’s future network and will expand the future addressable market.”


At 30 June 2017, SES’s fully protected contract backlog was EUR 7.5 billion (30 June 2016: EUR 7.3 billion). The substantial backlog is the result of the successful commercial activity across SES’s two natural business units – SES Video and SES Networks.

SES Video: 67% of group revenue (H1 2016: 70%)

  • Reported revenue up 5.4% to EUR 699.7 million (-3.1% like-for-like)

  • Improving trend with Q2 2017 at -1.9% (YOY) versus -4.2% (YOY) for Q1 2017

  • Nearly doubling reported revenue from integrated media solutions

As expected, a significant improvement in the year-on-year (like-for-like) development between Q1 2017 (-4.2%) and Q2 2017 (-1.9%) led to an overall reduction of 3.1% for H1 2017, compared with the prior period. This resulted from the impact of higher periodic revenue, predominantly in Q1 2016, beginning to progressively normalise over the course of 2017. Q2 2017 benefited from the signing of new agreements covering the existing fleet and recently launched capacity.

At 30 June 2017, SES’s global fleet carried a total of 7,741 TV channels, representing a year-on-year increase of 4%. SES’s HDTV channel count grew by 6%, year-on-year, to 2,587 channels, while the SES satellite network now also carries 20 commercial UHD channels (30 June 2016: 16), including regional variations.

Consequently, HD penetration increased from 32.7% to 33.4% in the last 12 months. Over the same period, the proportion of total channels broadcast in MPEG-4 increased from 58.9% to 63.5% of SES’s total TV channels.

The main highlights in Video included:

  • Media Broadcast Satellite and SES agreed a multi-year capacity extension contract for use of a full transponder at 19.2 degrees East to continue to serve customers in Germany, Austria and Switzerland;

  • Two multichannel video programming distributors (MVPDs) in the U.S. launched the first linear UHD services for cable and internet protocol (IP) TV subscriber homes using SES’s end-to-end UHD solution;

  • More than 25 MVPDs are now testing SES’s UHD all-in-one in North America. This includes Verizon, which is using the platform to drive the overall development of UHD delivery solutions for Verizon Fios;

  • Multi-year capacity agreement with MultTV to deliver approximately 60 (SD and HD) channels to smaller regional Internet Service Providers (ISP) across Brazil; and

  • Successful launch of SES-10, which will serve the Andean Community (Bolivia, Columbia, Ecuador and Peru) for direct-to-home broadcasting as well as fixed data and mobility services.

MX1 has continued to build market traction, offering a differentiated combination of end-to-end, linear and non-linear, media solutions. Compared with H1 2016, the proportion of reported revenue from integrated media solutions (combining capacity and value-added services) has nearly doubled, supported by the acquisition of RR Media and the creation of MX1. The commercial highlights for MX1 included:

  • Securing a long-term contract and expanded service agreement with Beta Film Ltd. for a range of media services, including content management, using the new and innovative MX1 360 platform;

  • Contract with the Israel Premier Football League to provide end-to-end services for live content editing;

  • MX1 and Sky Deutschland agreed a multi-year contract extension for the provision of back-up services to enable business continuity. The agreement includes playout and turnaround services, such as encoding, multiplexing and encryption, and uplink services;

  • Multi-year distribution agreement with VUBIQUITY for a new service offering broadcasters, TV channels and rights holders the ability to aggregate content and reach millions of viewers quickly and simply; and

  • Agreement to support the linear broadcasting requirements of a major global video on demand platform.

SES Networks: 33% of group revenue (H1 2016: 29%)

  • Reported revenue up 24.9% to EUR 343.4 million (+7.5% like-for-like)

  • Growth in Mobility and Government, complemented by broadly stable development in Fixed Data

  • Development agreement with Boeing to deliver next generation technology innovation

SES Networks comprises the Fixed Data, Mobility and Government verticals and integrates O3b’s unique high throughput, low latency Medium Earth Orbit (MEO) constellation and distributed network capabilities. The progress in each of these data-centric verticals is discussed separately below.

SES and Boeing have, today, signed a new agreement to develop innovative technology improvements aimed at delivering next generation technology that will form the basis for SES’s future satellite fleet.

Fixed Data: 13% of group revenue (H1 2016: 12%)

  • Reported revenue up 18.9% to EUR 139.6 million (-0.4% like-for-like)

  • Further expansion and service upgrades by major global GEO and MEO clients offsetting lower point-to-point wholesale capacity revenue (now representing around 1.5% of group revenue)

As the only multi-orbit and multi-frequency distributed network solutions provider, SES Networks has continued to secure new business opportunities, as well as scaling up services with existing, long-term tier one clients. H1 2017 revenue also benefited from periodic revenue of around EUR 9 million.

SES Networks is focused on supporting the applications and networks of the future for a range of telecoms companies, mobile network operators, cloud-based services and corporate enterprises, where it can benefit from important elasticity of demand and significant growth opportunities. The main highlights in Fixed Data included:

  • SES Networks will provide a full end-to-end solution, including wireless terrestrial communication, to connect nearly 900 sites throughout Burkina Faso using its high throughput, low latency MEO fleet;

  • Orange Central African Republic contracted SES Networks to deliver faster 3G services and improved internet connections for enterprise clients and hundreds of thousands of people in the region;

  • Intersat signed a multi-year, multi-frequency capacity agreement for the delivery of internet solutions across Africa, using the SES network and supporting teleport services;

  • Palau Telecoms increased contracted network capacity for the fifth time in under two years, nearly doubling its capacity requirement since going live on the MEO network;

  • Timor Telecom extended their contract for MEO services, which now delivers more than one gigabit per second of low latency connectivity delivered to two sites operated by Timor Telecom; and

  • Presta Bist Telecoms increased by 66% its contracted MEO capacity in response to rising demand for reliable, high-speed broadband in the Republic of Chad.

Mobility: 8% of group revenue (H1 2016: 5%)

  • Reported revenue up 88.1% to EUR 83.8 million (+37.1% like-for-like)

  • H1 2017 included upfront revenue contribution from Global Eagle Entertainment (GEE) in Q1 2017

  • Double-digit growth in both aeronautical and maritime underpinning strong growth outlook

In the first half of 2017, SES has continued to expand its global aeronautical mobility business with the leading providers of inflight connectivity and entertainment. This included:

  • GEE announced the acquisition of a Ku-band payload on SES’s AMC-3 satellite to boost capacity for its customers in North America, the Gulf of Mexico and the Caribbean;

  • Gogo signed a new contract to use capacity on 12 Ku-band transponders, and supporting ground infrastructure, to expand high-speed inflight connectivity services over the U.S. and Canada; and

  • Gogo subsequently leased all available capacity on AMC-4 to serve flights across Alaska, Hawaii, the west coast of the U.S., as well as over the Pacific Ocean.

The agreements with GEE and Gogo reflect SES’s unique approach of leveraging its global fleet, including non-station-kept satellites, to support growth opportunities across the Mobility sector.

SES Networks continued to gain market traction and benefit from differentiated capabilities to deliver flexible and scalable connectivity network solutions in maritime, including:

  • Multi-year contract with Primacom, which will use SES’s fully-managed Maritime+ service to deliver reliable and high-speed connectivity to vessels operating in the Asia-Pacific region;

  • Multi-year agreement with Telenor Maritime to provide a fully-managed solution delivering a high-quality end-user experience for passengers on eight of Silversea Cruise Ships’ ultra-luxury vessels;

  • SES and GT Maritime announced a partnership to provide a new volume-based solutions package, using SES Networks’ Maritime+ service, for a range of vessels across Europe and the Middle East;

  • Patrakom signed a multi-year agreement to use capacity across SES-9’s powerful mobility beam to provide connectivity for over 80 passenger vessels and oil barges traversing Indonesian waters; and

  • Satcom Global contracted capacity on both SES’s existing fleet and upcoming next generation hybrid satellites to deliver seamless, high-speed connectivity solutions for its customers.

Government: 12% of group revenue (H1 2016: 12%)

  • Reported revenue up 6.3% to EUR 120.0 million (+1.6% like-for-like)

  • Growing in global government, including important new business for LuxGovSat and O3b

  • SES GS benefiting from differentiated solutions and increasing stabilisation of U.S. Government demand

The main highlights in Government included:

  • SES GS contracted, on a multi-year basis, additional MEO services with a U.S. Government customer;

  • SES and the Luxembourg Ministry of Foreign Affairs extended a contract to maintain and support SATMED, a satellite-enabled e-health platform, until 2020; and

  • SES launched the Rapid Response Vehicle (RRV), a new Government+ solution, capable of delivering multi-orbit (GEO-MEO) and multi-frequency connectivity for a broad range of government missions.


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