The announcement coincided with the release of SES’ financial results for 2019. The group met its EBITDA objective but revenues came short of expectations as the Video business line failed to close an important contract. At constant currency, full-year EBITDA decreased 5.5 percent on 2018 to EUR 1.22 billion, as revenues contracted 3.8 percent to EUR 1.98 billion. Free Cash Flow before financing activities fell to EUR 826.3 million from EUR 870.5 million a year earlier.
For 2020, SES is guiding for revenues of EUR 1.92-2.00 billion, saying that over 80 percent of the outlook is already contracted. The EBITDA result is expected to be in the region of EUR 1.15-1.21 billion.
The company intends to lower its annual dividend rates to half the level paid in 2018. This will help support the sharp short-term rise in capital expenditure that the group is forecasting for 2021, linked to the O3b mPOWER and SES-17 projects.
Looking at the quarterly performance, the negative trend in underlying revenues continued in the three months to December, with a year-on-year drop of 3.1 percent at constant currency (-2.3% in Q3). The contraction was due to the ongoing fall in Video Distribution and Video Services revenues (-7.2% and -5.8% respectively), only partly offset by a 3.1 percent rise at the Networks business lines.
Within the Networks segment, Mobility remained by far the group's best performing division, with Q4 revenues up 21.8 percent to EUR 57.7 million (+21.7% in Q3).
The strategic review of the Networks subsidiary is part of a wider transformation programme named ‘Simplify & Amplify’, which will also focus on a number of other major projects, such as the repurposing of C band spectrum in the US. The programme will aim to refocus and simplify business activities, assessing the possibility of exiting certain market segments. Financially, it has an EBITDA optimisation target of EUR 40 - 50 million annually from 2021 onwards.
