US pull-out from Afghanistan hurt SES revenue forecast
The withdrawal of US troops from Afghanistan is pinching revenue expectations at Luxembourg satellite pioneer SES now that fighting forces don't need data access in the country's remote corners.
Société Européennes des Satellites on Thursday reported revenue of €444 million during the third quarter of 2021, down slightly from €462 million during the same period a year ago. Quarterly revenue fell in both the part of the company that provides data connections for governments and armies in remote areas of the world and the branch that streams television programmes worldwide.
Revenue from networks services, which also includes internet connections for cruise ships, fell by 1.3% during the third quarter to €184 million compared to the same period last year after removing currency fluctuations, SES said.
Following the US military evacuation of Afghanistan and the resulting lower demand in satellite usage, the company revised downward its revenue outlook for 2021 from a range of up to €1.82 billion to as much as €1.8 billion. The networks arm's revenue also was revised downwards from between €750 million and €780 million to between €720 million and €750 million.
This was "driven in part by the US rapid evacuation of Afghanistan," CEO Steve Collar said during a call with investors.
Revenue in the so-called video arm of the company, which streams television services to 361 million homes across the world, also suffered a nearly 5% third-quarter drop to €259 million. The fall in revenues can be attributed to customers in Western European and the US reacting as traditional methods of watching television face competition from streaming services, the company said.
In response to falling TV viewership and competition from streaming services such as Netflix and Amazon Prime, SES is pinning its hopes on expanding its networks arm.
As part of these plans SES sent its biggest and most advanced satellite in the company's history off into outer space on 21 October. The SES-17 - a half-billion-euro investment that will enable passengers and crews to use WiFi aboard planes - is due to start generating incremental revenue for SES in the second half of 2022, Collar said last month.
The company, which was founded in 1985 as Europe’s first private satellite operator, could also collect up to $4 billion (€3.32 billion) for moving out of coveted parts of the electromagnetic spectrum over the US. It is due to collect this money over the next two years, with Collar saying in a statement on Thursday that the first phase of the programme has been completed and the company expects to receive the first $1 billion of payments within the coming months.
The company has arranged with aerospace companies Northrop Grumman and Boeing to build new satellites to ensure that TV and radio programming beamed to nearly 120 million US homes is not interrupted when SES shifts away from the C-band spectrum.
The Luxembourg government and wholly-owned state banks BCEE and SNCI together own about 17% of SES, while 81% of the company is publicly traded.