SES lowers video forecast, gives glowing review of O3b mPower progress

Satellite fleet operator SES of Luxembourg lowered its revenue forecast for its television broadcast market July 27 while forecasting stable growth of data services.
SpaceNews.com

            WASHINGTON — Satellite fleet operator SES of Luxembourg lowered its revenue forecast for its television broadcast division July 27 while forecasting stable growth of data services.
Sharing the results of an internal review following his April appointment as CEO, Steve Collar described SES as taking a “more prudent view for video,” as revenues declined despite an increase in number of channels broadcast.
The majority of SES’s revenues — 68 percent — come from television broadcasts, including video services beyond just content distribution. By 2020, though, SES expects that number to be less than 60 percent as data services, currently 32 percent of revenues, increases to more than 40 percent.
Collar downplayed the revised video forecast, saying the overall picture for SES “is a healthy one.” The company reported 981.4 million euros ($1.15 billion) of total revenue for the first six months of the year, down 6.4 percent from the same period last year, and an operating profit of 227.7 million euros, down 9.3 percent compared to the same time period. Ignoring currency fluctuations, SES said revenues decreased only half a percent year over year, and profit by 5.6 percent.
Future business
SES’s biggest investment at present is O3b mPower, a seven-satellite system Boeing is building to provide 10 terabits of capacity for internet and data connectivity services. Collar said the completion of O3b mPower’s preliminary design review, disclosed by Boeing July 25, was “one of the cleanest that we’ve had,” and suggests SES is “going to be able to deliver more performance over that system than we initially expected.”
SES has 16 Ka-band O3b satellites in medium Earth orbit today, plus another four slated to launch next year on a Europeanized Soyuz from Arianespace. O3b mPower is expected to start launching in 2021, though SES has not yet announced a launch provider.
Collar said SES is maintaining its forecast for its data division, SES Networks, at 660 to 690 million euros this year. Following the internal review, SES said its SES Networks division should generate 850 to 900 million euros in 2020, compared to the previous forecast of more than 875 million euros.
Ferdinand Kayser, CEO of SES Video, said close to 95 percent of the anticipated 2018 revenue for the division was already secured by the middle of the year, appreciably higher than where the company was even at the end of 2017. SES attributed a combination of customer reductions in North America and the failure of some new broadcast platforms in emerging markets to a 2.3 percent decline in year-over-year video revenue, factoring in currency fluctuations. That decrease occurred even as SES’s total number of channels broadcast reached 7,941, a 3 percent annual increase, with capacity-intensive HD channels growing 7 percent to 2,765 channels and ultra-HD growing by more than 90 percent to 38 channels.
“The acceleration of HD and ultra-HD across Europe, North America and the international continues to be a key driver, demonstrating the long-term importance of satellite as the most efficient distribution network for providing tens of millions of viewers simultaneously with streaming content and which is the only one offering a quality guarantee,” he said.
Kayser said SES Video is pursuing strong business leads for SES-10, which launched last year to provide new coverage to Latin America, and SES-9, a replacement launched in 2016 for NSS-7 that provides some new capacity over Asia.
Optimistic on C-band
SES, together with Intelsat, Intel and most recently Eutelsat, submitted a plan to U.S. regulators that offers up 100 megahertz of C-band spectrum for 5G cellular networks that featured prominently in a government plan to open the band to more users.
Collar praised the Federal Communication Commission’s plan, released July 12, as “really encouraging,” despite indications that it may take more than 100 megahertz.
“We’ve been pretty clear that we have a plan that closes for 100 megahertz,” he said. “We also acknowledge the desire for more spectrum to be freed up and we are working on it.”
FCC Commissioner Michael O’Rielly said July 12 that he wants 5G to have 200 to 300 of the 500 megahertz of C-band currently allocated for satellite communications in the U.S., substantially more than satellite operators have volunteered to yield so long as mobile operators cover the expense. Satellite operators use C-band in the U.S. mainly for television broadcasting, along with some other services such as emergency communications when terrestrial systems are damaged or destroyed.
“Everything up till now has been win-lose: we get something, you lose something. This is the first time where we create an environment where we can invest in our customers, in our video neighborhoods and at the same time free up spectrum,” Collar said.
The FCC wants to free up more spectrum for 5G quickly to support new devices as telecommunications companies continue to test the technology this year. Satellite operators say such a timeline plays to their advantage over other plans, such as a spectrum auction.
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Source: SES lowers video forecast, gives glowing review of O3b mPower progress