Berenberg downgrades SES on O3b mPOWER delay


SES’s fifth and sixth O3b mPOWER satellites launched (Source: SES)

Analysts at Berenberg have downgraded SES following the Luxembourg-based satellite operator announced that technical problems affecting its first wave of O3b mPOWER medium Earth orbit satellites had reduced their operational life and capacity and that it was pushing back the launch of a commercial service.

Berenberg reduced its price target for SES stock from €9.30 to €7.20 but retained a buy recommendation and reiterated its generally positive view of the company.

The analysts said that they continued to look forward to full-year results in late February and any further announcements about usage of the €1bn of excess cash that SES has, following its receipt of $3bn of C-band proceeds in October.

Berenberg said it believed that the receipt of proceeds for clearing C-band capacity in the US would deliver capacity for shareholder returns of about €1 billion, above the €150 million share buyback already announced.

Interim SES CEO Ruy Pinto is due to hand over the reins to new chief executive Adel Al-Saleh before the February results announcement.

SES launched its fifth and sixth O3b mPOWER satellites earlier this month, but the problems with the earlier satellites mean it has pushed back a commercial launch of the service until February next year.

The company, which has been bedeviled by delays to the project, has suffered from unexpected power module switch offs to existing satellites.

It said it would put mitigations in place to cover the problems. It plans to upgrade satellites 7-11 and add two further satellites within its existing committed capex envelope.

SES said the expected impact of the delay would be in the mid-single digit percentage lower range in terms of 2024 revenue and adjusted EBITDA before the potential mitigations, which include optimising use of its existing MEO and GEO combined fleet and additional programmes.

Tags: Berenberg, SES

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