Shares of satellite maker SES slump on merger speculation

By Dina Kartit and Elena Vardon

(Reuters) – Paris-listed shares of satellite company SES fell 10% on Thursday after the Financial Times reported it was in talks with U.S. rival Intelsat over a potential merger.

The Luxembourg group, which also published half-year results on Thursday that beat expectations, declined to comment on market speculation.

The report signals further consolidation in this fast-moving sector, after Eutelsat said last week it was in talks over a possible merger with Britain’s OneWeb, which could help the two companies challenge Elon’s Starlink Musk, SpaceX, and Amazon.com’s Project Kuiper.

Demand for satellite launches is expected to pick up after recent sanctions sidelined Russia’s space launch industry, and giant satellite constellations could offer a new channel to deliver high-speed internet from the space.

“We’ve talked…about industry consolidation and how that’s…from my perspective at least, a good thing for the industry, but obviously we’re not commenting on any market rumors or speculation,” said CEO Steve Collar. .

“Whatever we do, we will obviously do it in the best interests of SES shareholders,” he added.

Intelsat, which went private in February following a financial restructuring that reduced its debt to about $7 billion, did not immediately respond to Reuters’ request for comment.

“The merger does something for cost, for scale and market share, but not so much for the structural issues that affect this industry in general and Intelsat in particular,” said Societe Generale CIB analyst Aleksander Peterc.

Satellite players face challenges as traditional video revenues decline and data becomes the main source of revenue for the satellite industry.

“SES may appear to be engaging in M&A talks just to not get left behind in the industry consolidation movement, and striking a deal for the sake of a deal is generally not a good idea. idea,” added Peterc.

The company reported adjusted basic profit (EBITDA) of 545 million euros ($555 million) on revenue of 899 million, both slightly above analysts’ estimates.

(Reporting by Dina Kartit and Elena Vardon in Gdansk; editing by Milla Nissi and Bernadette Baum)

Copyright 2022 Thomson Reuters.

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