[Satellite News 08-03-10] Analysts voiced support for SES’ decision to dump its ND SatCom asset as the subsidiary continues to impact SES’s results.
    In its 2010 half-year results, issued July 30, SES posted revenues 844.9 million euros ($1.1 billion), an increase of 4.5 percent compared to the same stage last year. ND SatCom was treated as a discontinued operation in the results. If the entity were included, SES’s revenue growth would have been reduced by about 1 percent.
    Petercam Analyst Matthias De Wit told Satellite News that SES made a mistake when it bought subsidiary ND SatCom. “With hindsight, it might not have been a great decision to acquire ND SatCom. But, I am positive about them retreating from this low-margin business, which is not really complementary to their core business. SES is perceived in the investor community as a safe haven, and investors do not like volatility here. I think it is the right decision to focus on the core infrastructure business, and get rid of this business as soon as possible. The return on this business has been much lower than expected.”
    In a conference call, SES CEO Romain Bausch said negotiations to sell ND SatCom are “well advanced” and that there “are firm offers on the table for ND SatCom”. Bausch says he expects the transaction to close in the near future and that the end of the year was a realistic timeframe to conclude the deal.
CM-CIC Securities Analyst Benjamin Rousseau said the investor community would be paying attention to how SES handles the divestment. “The deconsolidation of ND SatCom will have a decisive role to play in whether the group reaches its organic growth forecast in FY2010, as organic growth only reached 2.6 percent in our view in H1-10 factoring in ND SatCom, and at 4.6 percent when it is stripped out.”
    Natixis Securities satellite equity analyst Eric Beaudet said that, despite SES’ issues with ND SatCom, the operator still performed above expectations. “Indeed, with the recently launched satellites (SES 1 and SES 7) filling faster than expected, the group saw its organic growth gather momentum. This further confirms the strong demand for satellite capacity, underpinned by the development of TV packages in emerging markets and by HD TV. Against this backdrop, and given that these satellites did not go into orbit until the end of the quarter, we are confident that organic growth will continue to quicken and that the group will achieve its full-year guidance.”
    But, De Wit called the results a mixed bag. “The SES results were a mixed bag. You had the performance of the ND SatCom business, which saw revenues decline. On the other hand, what is more important is that the core business is continuing to perform well, and that is what matters to me and most investors. Therefore, while revenues may have been short of expectations, this is no big issue. What is also important is that you also see a good take-up of capacity on Astra 3B, as well as the new SES World Skies’ satellites. I believe they are performing well, and that they will meet their full year objectives. I am rather positive on their performance and their outlook going forward.”