SES S.A. (SGBAF) Q3 2025 Earnings Call Transcript

SES S.A. reported its Q3 2025 results, marking the first quarter with Intelsat fully consolidated from July 17, 2025, positioning the combined entity as a multi-orbit connectivity leader. While reported 9M revenue increased 19.8% to EUR 1.75 billion and EBITDA rose 11% to EUR 849 million, like-for-like performance saw a 1.8% revenue decline and a 10% EBITDA drop, attributed to profitability-diluting aviation equipment sales, U.S. government budget delays, media's structural headwinds, and third-party capacity costs from the IS-33e anomaly. The company is accelerating its EUR 2.4 billion synergy plan and prioritizes deleveraging its 3.7x net debt/EBITDA ratio. Growth in government and aviation remains robust, and the FY 2025 outlook projects revenue of EUR 2.6-2.7 billion and adjusted EBITDA of EUR 1.17-1.21 billion, with reduced CapEx. The company also noted progress on IRIS2 and anticipates an FCC decision on C-band spectrum, expecting full cost reimbursement.

Analysis

SES S.A. reported its Q3 2025 results, marking the first quarter with Intelsat fully consolidated from July 17, 2025. While reported 9-month revenue increased 19.8% year-over-year to EUR 1.75 billion and adjusted EBITDA grew 11% to EUR 849 million, like-for-like performance showed a 1.8% revenue decline and a 10% adjusted EBITDA drop. This divergence is primarily attributed to profitability-diluting aviation equipment sales, U.S. government budget delays, structural decline in media, and increased third-party capacity costs due to the IS-33e anomaly. The overall sentiment remains moderately positive, reflecting management's optimistic outlook on strategic integration and future growth drivers.
The company is aggressively pursuing synergies from the Intelsat acquisition, targeting a total net present value of EUR 2.4 billion with an annual run rate of approximately EUR 370 million, 70% of which are expected within three years. Management highlighted strong growth in government and aviation segments, securing significant contracts and renewals, including 200 new tails in aviation. Conversely, the media segment continues to face structural declines, and the fixed business remains highly competitive, necessitating rationalization and focus on high-yield opportunities.
SES maintains a firm commitment to deleveraging its 3.7x adjusted net debt to adjusted EBITDA ratio to a target of 3.0x, supported by disciplined capital allocation and reduced 2025 CapEx guidance of EUR 600-700 million. The company also anticipates a favorable outcome from the FCC's C-band spectrum process, expecting full cost reimbursement. The full-year 2025 outlook projects revenue between EUR 2.6-2.7 billion and adjusted EBITDA between EUR 1.17-1.21 billion, emphasizing foundational work and integration efforts for future profitable growth.

Key Decisions for Investors

• Monitor SES's deleveraging progress closely, particularly its ability to reduce the 3.7x net debt/EBITDA ratio towards the 3.0x target, as this is a stated priority and key to financial flexibility.
• Evaluate the realization of the EUR 2.4 billion synergy target and its impact on future profitability and cash flow, especially given management's assertion of delivering ahead of plan.
• Assess the long-term growth trajectory of the government and aviation segments, which are key drivers offsetting structural declines in media and competitive pressures in the fixed business.
• Track the FCC's C-band spectrum decision on November 20th for potential financial upside, considering the expectation of full cost reimbursement and the company's strong positioning.