The two major satellite operators SES and Intelsat are negotiating a merger. “In response to rumors in the market, SES confirms that the company has started discussions about a possible merger with Intelsat,” the Luxembourg company confirmed on Wednesday. However, it is still unclear whether an agreement will be reached. This is a common statement that helps avoid securities law troubles.
SES operates more than 70 satellites and claims to be the only satellite operator with earth satellites in different orbits: In addition to geostationary satellites (GEO) at an altitude of around 36,000 kilometers, SES also operates the O3b fleet in a medium orbit (MEO) at an altitude of around 8,000 kilometers. Boeing is also planning a multi-orbit satellite network.
Intelsat is also based in Luxembourg, but the operations center is in the USA. The past decade was marked by significant sales declines and severe losses towards the end of the decade. In 2020, Intelsat finally had to seek bankruptcy protection. This enabled a settlement in which the debt burden was reduced from $16 billion to $7 billion and shareholders were expropriated. Intelsat also gained access to $6.7 billion in new funding. It’s not clear how Intelsat is doing financially now that the company is no longer publicly traded.
Billion dividend for the C-Band
SES turned over 1.94 billion euros in 2022 (+9.1% year-on-year) and is therefore likely to be the larger of the two companies. About half of the sales come from the distribution of moving images (SES Video, sales of a good one billion euros) and half from Internet connections (SES Networks, 923 million euros) via satellite. However, the operating profit fell by 70 percent to million euros in the year; after a net profit of 446 million euros in 2021, it posted a net loss of 35 million euros in 2022.
The good news was the operating cash flow of a good one billion euros. SES’ debt amounted to 3.9 billion euros at the turn of the year. After all, both companies are facing a rain of money from the USA: SES and Intelsat have renounced frequency usage rights in favor of 5G mobile networks, for which they are entitled to 9.7 billion US dollars. In addition, there is a reimbursement of several billion dollars for necessary technical measures.
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