Multi-orbit satellite operator SES is on the verge of realizing key strategic goals that have been years in the making.
After recently deploying the geostationary satellites needed to claim around $3 billion in C-band spectrum clearing proceeds, the company is now just months away from launching initial services for its upgraded O3b mPower broadband network in medium Earth orbit (MEO).
So many were surprised to see Steve Collar’s June 12 announcement that he was retiring as CEO two weeks later, following more than 20 years with the Luxembourg-based operator, including five years at the helm.
Collar was replaced by Ruy Pinto, who joined the company in 2017 and was previously its chief technology officer.
In his first SES earnings call as CEO Aug. 3, Pinto said an electrical glitch on the first four O3b mPower satellites was sporadically tripping off power modules — although the trip-offs could be resolved quickly without affecting payload performance.
Still, the issue has delayed the launch of the fifth and sixth O3b mPower satellites, which are needed for initial services and were slated to launch by the end of June as of the operator’s previous earnings call. Boeing is contracted to provide 11 Ka-band O3b mPower satellites to enable full services from the operator’s second-generation MEO constellation.
SpaceNews caught up with Pinto on the sidelines of Euroconsult’s World Satellite Business Week conference in Paris to learn more about how the operator is tackling its opportunities and challenges.
Steve Collar’s sudden departure as CEO in June surprised many in the industry. Was it also a surprise for you?
It was a surprise to a certain extent. But Steve is staying on as an advisor and is very much engaged in what is happening with the industry and what is happening with SES — I talk to him quite often.
Was it partly a result of diverging views with the board?
The board, Steve, the management team, and myself have been very consistent on our strategy. We have strong financials, we’ve focused on our unique capabilities around MEO, we are investing in O3b mPower, and we believe in our strong position in markets like cruise and government.
We have also been looking at consolidation in the industry. We have acquired [satcoms provider] DRS and we’ve doubled down on our U.S. government business — a great acquisition and we’re really pleased with that.
We did look at other options, as we should. We tried to reach a good deal with Intelsat over quite some period of time that didn’t work.
But we do believe in the logic of consolidation in the industry. We are on the record saying consolidation is a good thing in a disrupted industry like ours.
So it wasn’t connected with what happened with Intelsat, or what didn’t happen?
There wasn’t a single thing, and certainly not the negotiations with Intelsat. The negotiations were difficult, otherwise Intelsat and SES would have reached an agreement. In Steve’s words, there is a shelf life to all CEOs, and it was time for him to go, especially since he felt he was leaving SES in good hands.
How could the company’s strategy change under your leadership?
There is no fundamental shift in the strategy I just outlined, but strategy is not fixed in time, as well. You can think of strategy as a budget. The moment you finalize a budget, the market and customers move on, and the budget has to be updated.
The main tenets of our strategy are:
- Building upon the strength of our new assets, and we are putting our money where our mouth is with O3b mPower.
- Looking at options for consolidating our industry if we can — and that cuts both ways, you can only consolidate if two parties wish to consolidate, and DRS is a good example.
- Protecting our video business, because it still underpins our business.
- Focusing on segments where we have a better position, or where the market has been changing. The best example of where SES would like to double down is government. You hear it left, right, and center that space is strategic, sovereign, and there’s opportunity there with programs like IRIS² in Europe.
With the receipt of the C-band proceeds, which should happen this year, our balance sheet will have a good position in the industry, being an investment-grade company with good cash flows and money to invest in opportunities that are sensible. Not throwing money out of the window, but being selective and objective on where we can invest in technology, partnerships, and products to leverage our strong financial position.
And of course, there’s competition from Starlink, and future competition from Project Kuiper and Telesat Lightspeed. We also all expect the deal between Eutelsat and OneWeb will close soon, so that will be another data point.
And there’s also potential competition coming to MEO, such as Intelsat as it explores options for this orbit.
I’m very proud that Intelsat has followed our strategy in MEO. They’re endorsing what we have been thinking for quite some time — 10 years.
But on a more serious side, firstly, they’re in a different frequency. Intelsat have a lot of assets in Ku-band.
And even if they were to give you a press release tomorrow with a firm commitment, it will take some time for them to get into orbit to learn what we have learned over the years, and get the experience in software, hardware, infrastructure, and ground segment.
I’m mindful, but I’m not losing any sleep over that.
Do you expect to decide soon on how to invest the C-band proceeds?
Rushing doesn’t necessarily help. We have to be quick once we make a decision, but we don’t necessarily need to be quick in reaching that decision on how best to deploy the capital that we will have.
A big source of current investment is O3b mPower. Where are you in resolving the technical glitch you recently disclosed there?
We have been working really hard with Boeing and we have a way better understanding of this phenomena than we had two months ago. This gives us the confidence that we can provide the level of service that our customers expect, and that we expect from O3b mPower.
With a mix of operational [changes and] updates to the software, we can live with this phenomenon. It doesn’t impact the lifetime of those satellites as far as we know.
The current plan is that we are on target to launch the next two in October. We did some small things on them that we hope to mitigate this phenomenon, but it’s not something that prevents us from getting O3b mPower working.
And that’s really good news. We are going to put in place a constellation with about 10 years of expected lifetime, so for the sake of one, two, or three months, it doesn’t detract us from doing the right thing.
You have seen the unfortunate experiences that Viasat has had over the last two months as a sign that sometimes being a little bit more conservative, and really understanding how the technology performs in a harsh environment, pays off.
What changes did you make to the two upcoming satellites?
They are good things to do in terms of shielding and cabling. We don’t expect them to be a silver bullet for the phenomena we have observed, but they’re sensible things to do.
Of course, launching them gives Boeing and us time to go from: Now we understand what is happening to can I just prevent it from happening altogether on the following five satellites?
Are they packed up and ready for the launchpad?
They’re not packed up yet, but if we’re going to meet a launch in October we’re going to have to ship them by the end of September.
What is your take on the potential for price erosion from the masses of satellites launching in the coming years?
When you have a competitor like Starlink, which is increasing its capacity at a fast pace, the demand will continue being outstripped by the supply in certain geographies and markets, and that will drive price erosion. It’s just the nature of competition.
But there will be other geographies and market segments. For the concentration of cruise ships in the Mediterranean in the summer, the supply doesn’t meet the demand there. So we should be able to have profitable pricing in that geography and at that time, for example, and there are also hotspots in government and aviation.
O3b mPower’s ability to shift capacity from A to B, based on need and time of day, allows us to provide a capability and flexibility that our customers will be willing to pay a premium for.
It was interesting to see SES partner with Starlink in the cruise market, which has been a stronghold for you. How did that deal come about?
We were the first to launch on a reusable Falcon 9, and we have discussed possible joint initiatives in the past.
Our customers in the cruise market have been saying, look, the market is evolving and there is a lot of demand for connectivity. We would like to have the Starlink capability available for our ships — it’s not guaranteed, it may not have burst capacity or the flexibility that you have on MEO, but we want it for certain applications. At the same time, we also want MEO.
Given customers want the best of both worlds, and have been coming to us saying we want the capability that Starlink brings, we decided to partner with Starlink to sell this managed service to the market.
We’re still giving our customers a choice. Nobody is forcing them to go left or right, but going jointly to certain customers who want it is way better for both companies.
And it’s a model that we may wish to discuss or replicate in very selective opportunities, markets or geographies. It doesn’t mean Starlink will not compete directly with us in certain adjacent markets, and vice versa.
We’ve seen Intelsat and Inmarsat buy small satellites for their geostationary businesses recently. Are smaller, more regionally focused satellites in geostationary orbit (GEO) also of interest to SES?
We don’t have any short-term plans for GEO replacements. We have time. But for our next neighbor slot where we need to replace our GEO capacity, we are going to look at those options.
There is potential. If they can prove their viability, the price points, and the scale and flexibility, then of course we’re going to look at it.
You have partnered with Eutelsat to bid for a role in IRIS². Are you concerned that their acquisition of U.K.-based OneWeb could complicate what is a very European project?
If that turns out to be an issue, it’s more of a Eutelsat concern than ours. Having said that, we are part of a team and we believe we have put together something that’s potentially very compelling for the European Commission.
This interview has been edited for length and clarity
