SES Profits Buoyed By Emerging Markets

by

PARIS — Satellite fleet operator SES reported July 27 a 4.8 percent increase in revenue and a 5.3 percent increase in gross profit for the six months ending June 30, saying emerging-market demand and Europe’s appetite for high-definition (HD) television remained strong.

The North American market, as expected, showed almost no growth, but SES said it has been able to redeploy satellite assets over the North American arc to Latin America to capture the growth there.

In conference calls with journalists and financial analysts, SES Chief Executive Romain Bausch said SES’s push into the emerging markets of Latin America, Africa, the Middle East and Asia delivered the expected results in the first six months of 2012.

Revenue from these markets, which Luxembourg-based SES does not break down into specific regions, increased by 8 percent over the first half of 2011, to 232 million euros ($292 million) after adjusting for foreign exchange fluctuations.

SES is in the middle of a large expansion program that is deploying new satellite capacity worldwide, but with a special focus on the markets outside Europe and North America.

Bausch said per-transponder revenue, meaning the average annual pricing of leasing 36 megahertz of bandwidth over the emerging markets, remained stable despite patches of weakness in Africa.

He reiterated SES’s view that African pricing would remain soft, and may decline slightly, in the next several years as the continent absorbs new satellite capacity coming into the market. After that, he said, pricing and satellite fill rates will increase.

The average fill rate of satellites pointed toward the emerging markets was 74.2 percent as of June 30, lower than in Europe (81.4 percent) and North America (74.2 percent) mainly because SES is busy launching new satellites there.

In Europe, the demand for high-definition television, which broadcasters often must simulcast with standard-definition television for viewers that have not yet switched to HD, remained so strong that Europe-based revenue growth compensated for the loss, on April 30, of 29 transponders following the switch-off of analog television in Germany.

The loss of the analog business, long planned under German government order, will deprive SES of 107 million euros in 2012 when compared with 2011, and of 150 million euros in 2013, the first full year without the analog business.

SES said it has already resold 13 of these transponders, including 10 that are already generating revenue from new customers, with the remaining three set to re-enter commercial service by January 2014.

Longer term, Bausch said the position of satellite television worldwide looks promising as the same broadcasters that now simulcast programs in both standard-digital and high-definition format in the coming years will move to simulcasts in high-definition and a new standard called ultrahigh-definition.

Compression technologies will advance as well, but with networks broadcasting in HD and ultra-HD, satellite fill rates should remain high, Bausch said.