SES mulls external investments for O3b, Networks business

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WASHINGTON — Satellite operator SES may separate its growing Networks business, which includes O3b, from its slowing video business to spur outside investment. 

Giving SES Networks more independence could include an initial public offering that would give prospective investors more visibility into SES’s broadband-focused Networks business, SES CEO Steve Collar said March 2. 

“What it gives us, we think, is strategic flexibility,” Collar said during an earnings call. “And that means both on the Video side of our business and on the Networks side of our business. That is going to be important for us.”

SES’s Networks business generated 38.4% of the Luxembourg company’s 1.98 billion euros ($2.2 billion) in 2019 revenue, growing by 9.5% while the company’s total revenues decreased by 1.3% from the year prior. 

SES’s Video business, the larger half of the company at 61.6% of total revenues, generated 1.21 billion euros, down 7.1%. 

In an interview, Collar said SES expects to make a decision about its Networks division this year. Networks, which includes the 20-satellite O3b constellation in medium Earth orbit as well as several of SES’s 50 or so geostationary satellites, would stay firmly under SES’s majority control regardless of the outcome, he said. 

In the three years since SES bifurcated its internal structure into Video and Networks divisions, the company has realized how distinct those two divisions are, Collar said. 

Collar said SES’s Networks business is high growth, but more capital intensive than the Video business. 

SES has three launches planned for 2021 in support of its Networks business. Seven satellites it ordered from Boeing for the medium-Earth-orbit O3b mPower constellation are slated to launch on a pair of SpaceX Falcon 9 rockets, while the SES-17 geostationary satellite it ordered from Thales Alenia Space is slated to launch on an Ariane 5 rocket. SES foresees spending 1.35 billion euros in 2021, the bulk going towards major payments on these programs as they come due. 

SES is projecting full-year revenue for 2020 to total between 1.92 billion and 2 billion euros with EBITDA, or earnings before interest, taxes, depreciation and amortization, of 1.15 billion to 1.21 billion euros.