SES Reports Flat Revenue ahead of SpaceX’s Watershed Launch of SES-8

by

PARIS — Satellite fleet operator SES on Nov. 8 said a sharp decline in its North American business for the three months ending Sept. 30 was offset by modest growth in Europe and a double-digit increase in revenue from the rest of the world.

Luxembourg-based SES said transponder-lease prices were holding steady in all three regions and that its fleet’s overall fill rate was 74 percent, slightly higher than a year ago despite the addition of 29 new transponders from satellites launched in the past 12 months — almost all of them dedicated to the international markets.

SES launched two satellites in the three-month period ending Sept. 30 and expects to launch two more by the end of this year. The SES-8 satellite, which provides both replacement capacity and additional transponders for new business, is now scheduled for launch Nov. 22 aboard a Space Exploration Technologies Corp. (SpaceX) Falcon 9 rocket.

Hawthorne, Calif.-based SpaceX has never conducted a launch to geostationary transfer orbit, the drop-off point for SES-8 and most telecommunications satellites. But a late-September launch of the new-version Falcon 9, called the Falcon 9 v1.1, apparently offered SES sufficient proof of the vehicle’s capability to proceed with the SES-8 launch.

The September launch failed to complete a reignition of its upper-stage engine, a step that will be needed for the SES-8 launch. SpaceX officials said after the launch that the engine has performed the reignition maneuver multiple times on the ground, and that correcting the anomaly should not require a second demonstration flight.

SES has insured SES-8 for about $200 million and paid a 12 percent premium. One industry official said the consortium of underwriters backing the launch has agreed to permit the launch to go forward.

SES’s Astra 5B, whose launch has been delayed since September as the Arianespace launch consortium sought a co-passenger for the heavy-lift Ariane 5, is scheduled for launch in early December.

The company said transponder-lease prices in all three of its regions remained stable but that new competition in Africa was putting pressure on rates there for data and enterprise networks. However, SES said growth in the number of African satellite television channels is continuing and that crafting satellite TV neighborhoods is an expertise that has not been commoditized, unlike some data and enterprise transmission capacity, which should play to SES’s strengths. 

SES said its government division, which sells capacity to the U.S. Defense Department and other U.S. government agencies, grew its revenue in the three months ending Sept. 30 despite the U.S. government budget turmoil, which has been an issue with some of SES’s competitors.

The company said that the growth of the government business in the first half of 2013 is nonetheless likely to disappear by the end of the year, resulting in a flat year-on-year performance.

In a conference call with financial analysts, SES Chief Executive Romain Bausch said he remains optimistic that the U.S. and other allied militaries will gradually move toward a more imaginative use of commercial capacity.

Bausch said the advent of all-electric satellites, which weigh far less than a conventionally fueled satellite of the same output, could open the door for government use of commercial spacecraft as launch platforms for smaller payloads that would be carried to orbit by the larger telecommunications satellite before being released. SES is investing, with the 20-nation European Space Agency, in an all-electric satellite design.

For the three months ending Sept. 30, SES reported revenue of 467.7 million euros ($631.4 million), flat from the same period a year ago. Earnings before interest, taxes, depreciation and amortization was also flat at 72.2 percent of revenue.

The biggest contrast was in the performance of the North American and international markets compared with a year ago. North American revenue dropped nearly 19 percent. Much of the decline was attributable to the fact that last year’s figures were inflated by a short-term lease of a Ka-band payload on the SES-3 satellite. 

But the number of transponders in use over North America dropped by 15, in part because of the departure of one customer that had been leasing eight transponders. Bausch said during the call that SES continues to generate revenue from the customer in question even though the satellite capacity provided has moved from an SES spacecraft to another satellite.

SES did not identify the customer, but the contract’s contours suggest it is a U.S. government contract for which SES is manager. SES would generate revenue from handling the lease to a third-party provider, but at a lower profit margin.

In international markets, SES’s available capacity increased by 49 transponders compared with a year ago but the fill rate nonetheless increased as the company booked contracts faster than it added capacity.

 

Follow Peter on Twitter: @pbdes