SES sees big decline in video business

Satellite operator SES’s video business continued to deteriorate in the first quarter, with analysts at Berenberg commenting that the long-term picture was worrying, despite the impact of a one-off loss in the quarter from the end of a wholesale leasing agreement with Echostar.

SES’s data business on the other hand continue to perform well, particularly in the mobile and government segments.

SES posted revenues of €480.6 million, down 2.3% at constant currency. Video revenue was down 7.3%, while networks revenue was up 5.4%.

SES posted Q1 EBITDA of €290.1 million, down 7% at constant currency.

CEO Steve Collar said that the company had made a “solid start” to the year, while noting that the video market was tough.

“Notwithstanding challenging market conditions in Video, SES’ reach continued to grow and we now deliver prime video content to over 355 million households or one billion people across our video neighbourhoods around the world. The recent deals we signed with Discovery, Nordic Entertainment Group and Crown Media highlight our approach to partner with the biggest broadcasters to deliver the best services and viewing experiences anywhere to any device. In addition, we continued to expand our international footprint with new partnerships such as Benin and our growing technical reach in Africa, Asia Pacific and Latin America,” he said.

Collar also pointed to the potential upside from the C-Band Alliance’s moves to negotiate the sale of C-band capacity for 5G mobile applications in the US while protecting satellite services.

Berenberg said that while the company’s video performance in the second half “should look less bad” in the second half thanks to favourable comparatives, “the picture here is clearly worrying, and guidance for 2020 still quite a challenge to reach, in our view.”

The analysts noted that SES was now moving to merge its services and distribution activity to fight the commoditisation of satellite capacity for video, particularly in emerging markets. a