SES S.A. and Intelsat recently announced their merger, creating a stronger and more competitive multi-orbit operator in the satellite communications industry. This partnership brings numerous benefits for shareholders of SES and Intelsat.
Firstly, the combined company will have an expanded network, providing enhanced coverage and improved resilience for customers. This expanded network will enable the company to develop and deliver compelling solutions that meet the specific applications customers need.
Furthermore, the merger will result in increased revenue in highly valuable and growth segments, leading to a stronger financial profile for the combined company. With €9 billion of gross backlog, €3.8 billion of projected revenue in 2024, and €1.8 billion of Adjusted EBITDA in the same year, the company’s financial outlook is robust. Additionally, the transaction is highly accretive to free cash flow per share from Year 1 and delivers €2.4 billion net present value of synergies.
Investors and analysts should model the combined business with expectations of growing revenue, Adjusted EBITDA, and Adjusted Free Cash Flow. The medium-term outlook predicts a low to mid-single digit compound average growth rate (CAGR) from 2024 to 2028, with growth in Networks offsetting lower Media revenue.
As for the debt metrics, the combined company is confident in maintaining its investment grade rating. The existing debt of SES and Intelsat will be managed through repayment and the issuance of new debt, including new hybrid bonds. The new debt of €3 billion will be fully backstopped by a committed bridge facility and will contribute to the financial stability of the combined company.
In conclusion, the merger between SES and Intelsat brings significant benefits for shareholders, including an expanded network, increased revenue, and a stronger financial position. The combined company’s outlook for growth and stability positions it as a key player in the satellite communications landscape.
In addition to the benefits mentioned in the article, there are several current market trends that support the SES and Intelsat merger. Firstly, there is a growing demand for satellite communications services, driven by the increasing need for reliable and high-speed connectivity across industries such as telecommunications, broadcasting, aviation, and maritime. This trend is expected to continue as more countries and regions seek to expand their digital infrastructure.
Another market trend is the rising demand for data services, fueled by the increasing use of cloud computing, Internet of Things (IoT), and big data analytics. As businesses and consumers generate and require more data, satellite communications companies like SES and Intelsat play a crucial role in providing the necessary infrastructure to support these services.
Furthermore, the emergence of new technologies such as 5G and High Throughput Satellites (HTS) presents opportunities for the combined company to deliver faster and more efficient connectivity solutions. These technologies enable higher data rates and lower latency, allowing for enhanced video streaming, IoT connectivity, and other bandwidth-intensive applications.
However, there are also some key challenges and controversies associated with the merger. One potential challenge is regulatory approval, as the combination of two major players in the industry may raise concerns about market concentration and competition. The companies will need to address these concerns and work closely with regulatory bodies to gain approval for the merger.
Another challenge is the integration process itself. Merging two large organizations with different operating models, cultures, and technologies can be complex and time-consuming. The success of the merger will depend on the ability of the companies to effectively integrate their operations, systems, and personnel.
Moreover, there may be concerns among customers and stakeholders regarding potential changes in pricing, service offerings, and quality of service as a result of the merger. It will be important for the combined company to communicate and reassure customers about the continuity and improvement of their services.
Overall, the SES and Intelsat merger has the potential to create a stronger and more competitive entity in the satellite communications industry. It will enable the combined company to leverage their expanded network, drive revenue growth in valuable segments, and maintain a strong financial profile. However, it will also face challenges related to regulatory approval, integration, and customer perception.
For more information on the satellite communications industry and related market trends, you can visit the Satellite Industry Association’s website at www.sia.org.