WASHINGTON — Fleet operator SES is adding cloud services to its data and broadcast businesses while acknowledging that broadcast revenue has been shrinking faster than data revenue is growing.
SES reported 1.434 billion euros ($1.591 billion) in revenue for the first nine months of 2019, down 3.6% compared to the same time last year. TV video broadcasting, which represented 62% of the company’s total revenue, shrank by 8.1% to 904.5 million euros.
Ferdinand Kayser, head of SES’s video division, said lower revenue from U.S. broadcasters who are dropping standard-definition channels, combined with changing viewing habits among consumers, weighed down SES’s financial performance. The company has already borne the brunt of those losses, he said during an Oct. 25 earnings call.
“We believe that this trend is not indicative of the expected long-term revenue trajectory,” Kayser said.
Kayser said the total number of channels SES broadcasts has grown by 3%, with capacity-intensive HD and Ultra-HD channels also growing in number. Less than 10% of the company’s video business comes from the U.S., he said, limiting the company’s exposure to more losses there.
“We can confirm that the decline in video is decelerating,” he said.
Three days after the earnings call, SES announced that it is poised to raise 500 million euros next month by issuing eight-year bonds that will help refinance existing debt. In an Oct. 27 news release, SES said the bond’s 0.875% coupon rate is the lowest in the company’s history. The transaction, which was oversubscribed by more than five times, will “further strengthen [SES’s] liquidity profile ahead of a EUR 650 million senior debt maturity in March of next year.”
Kayser said SES can now sell turnkey media delivery services that leverage Microsoft’s Azure cloud network to broadcasters and content delivery companies. SES customers can use Microsoft Azure to transfer video files, prepare content for broadcast, and other functions, he said.
Intelsat, Viasat and Inmarsat also use Microsoft’s Azure network as a growing number of satellite operators warm to cloud networks.
SES CEO Steve Collar said SES could find new ways of delivering video content through its increasing use of cloud servers.
“Everything we do now is referenced to the cloud,” he said. “Our partnership with Microsoft allows us to extend Azure across our network, providing lightning-fast access to the full capability of connected cloud.”
John-Paul Hemingway, head of SES’s networks division, which includes the O3b medium-Earth-orbit satellites, said SES Networks is investing in network intelligence, analytics and automation, to increase customer adoption of satellite-enabled cloud services.
Collar said SES wants to continue growing its networks business by simplifying the use of satellites in multiple orbits. SES has 20 O3b satellites in 8,000-kilometer medium Earth orbits, and more than 50 satellites in 36,000-kilometer geostationary orbit.
Collar said SES has leveraged satellites in both orbits to gain maritime customers, particularly in the cruiseship sector. Now, the company wants to broaden the appeal of multiple orbits to aviation, where aircraft can quickly pass through the coverage zones of several satellites during a single flight.
SES announced Oct. 23 it had demonstrated switching between MEO and GEO satellites on a flight from Florida to Nicaragua using Thales FlytLIVE connectivity network, a modem from Hughes Network Systems and a phased array antenna from ThinKom.
“This is particularly relevant as aero is already our fastest growing segment, up almost 30% in Q3 this year versus Q3 last year,” Collar said.
Proving out that interoperability will help prepare the aviation market for the seven MEO O3b mPower satellites and the geostationary SES-17 satellite that SES has scheduled to launch in 2021, Collar said.
SES’s backlog of business stood at 6.6 billion euros, down from 7.0 billion the same time last year and 7.6 billion euros at the end of the third quarter of 2017.