Top Stories
Satellite maker SES’s shares slump on merger speculation
Global Banking & Finance Review®
Company
By Dina Kartit and Elena Vardon
(Reuters) -Satellite company SES’s Paris-listed shares slumped as much as 10% on Thursday after the Financial Times reported it was in talks with U.S. rival Intelsat about a possible merger.
The Luxembourg-based group, which also posted half-year earnings that beat expectations on Thursday, declined to comment on the market speculation.
The report signalled further consolidation in the rapidly changing industry, after Eutelsat last week said it was in talks over a possible merger with Britain’s OneWeb, which could help both companies challenge Elon Musk-owned SpaceX’s Starlink and Amazon.com’s Project Kuiper.
Demand for satellite launches is expected to accelerate after recent sanctions sidelined the Russian space launch industry, and giant satellite constellations could offer a new channel to beam broadband Internet from space.
“We’ve talked … about industry consolidation and how that is … from my perspective at least, a good thing for the industry, but we obviously don’t comment on any market rumours or speculation,” CEO Steve Collar said.
“Whatever we do, obviously we will do in the best interest of SES shareholders,” he added.
Intelsat, which went private in February following financial restructuring that reduced its debt to around $7 billion, did not immediately respond to Reuters’ request for comment.
“The merger does something for costs, for scale and market share, but not so much for the structural issues besetting this industry in general and Intelsat in particular”, Societe Generale CIB analyst Aleksander Peterc said.
Satellite players are facing challenges as traditional video revenues decline and data becomes the dominant source of satellite industry revenue.
“SES may seem to engage in M&A talks just so that they’re not left out of industry consolidation move, and doing a deal for the sake of a deal is usually not a good idea,” Peterc added.
The company reported adjusted core earnings (EBITDA) of 545 million euros ($555 million) on revenue of 899 million, both slightly above analysts’ estimates.
($1 = 0.9818 euros)
(Reporting by Dina Kartit and Elena Vardon in Gdansk; editing by Milla Nissi and Bernadette Baum)
A merger is a business strategy where two companies combine to form a single entity, often to enhance competitiveness, increase market share, or achieve cost efficiencies.
Financial restructuring involves reorganizing a company's financial setup, often to reduce debt, improve cash flow, or enhance financial stability.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's overall financial performance and profitability.
Satellite launch demand refers to the need for launching satellites into orbit, driven by factors such as technological advancements and increasing applications in telecommunications and data services.
Corporate strategy is a comprehensive plan that outlines how a company will achieve its goals and objectives, including decisions on mergers, acquisitions, and resource allocation.
Explore more articles in the Top Stories category
