Barcelona
11-13 November 2015
Fixed Satellite Services (FSS) Industry by revenue
(1)Satellite sector at a glance
Highly attractive dynamics for a global satellite operator
22%
21%
16%
7%
34%
Key fundamentals of satellites:
Satellite an efficient, cost effective solution
for video and data transmission
High margins and income visibility,
generating robust long-term cash flows
Highly technologically driven industry with
benefits of continuous innovation
Key challenges for new entrants:
Spectrum a finite and regulated resource
High level of capital requirements
High level of technical expertise needed
Increasing market vertical expertise focus
Intelsat
Eutelsat
Telesat
Other
Operators
1) Source: NSRTotal (2014):
USD 11.6 billion
Satellite’s essential role in communications networks
Superior reach and quality to any terrestrial network
Satellite covers virtually 100% of households with broadcast video capability, delivering flawless high quality (UD/UHD) media content
29% of developed and 7% of emerging market households have
broadband access. Only 5% of homes have broadband over 100 Mbps Satellite remains the only architecture capable of delivering connectivity to
aeronautical and maritime platforms
100%
Coverage of Land, Sea, and Air via satellite
Extremely high availability compared with end-to-end terrestrial network availability in many emerging markets (due to poor peering/outages) Live HD broadcast requires sustainable peak-time access of 20 Mbps per
household to mitigate contention, significantly higher than global average Delivers uninterrupted, consistent bandwidth, enabling high quality
viewing experience unaffected by simultaneous viewing/audience size Satellites regularly broadcast directly to over 100 million homes in
perfect HD quality; while the largest simultaneous audience attained and sustained over terrestrial network was 8 million SD viewers(3)
99.99%
Satellite availability
4-5 Gbps
Consistent broadcast bandwidth per satellite
Variable
average end-to-end network availability5 Mbps
(2)
Average global broadband speedReach
Quality
Satellite
broadbandTerrestrial29%
Developed(1)7%
Emerging(1)0%
Mobility Broadband coverageSatellite’s essential role in communications networks
Cost efficient and scalable solution, complemented by OTT
USD 15
Cost to deliver HD movie to any number in footprint
USD 2
Fixed cost per household (Germany)
USD
25,000
(1)
Cost to deliver HD movieto 2.5 million viewers
USD 500
(2)
Fixed cost per household (Germany)
~1ZB
Broadcast video delivered by SES per year
~1 ZB
(3)
Total volume of internet traffic in 2015 Satellite progressively more efficient for media content delivery as
audience grows; terrestrial only cost-efficient at small audience sizes Satellite CapEx investment stays fixed, regardless of growth in receiving
homes. Fixed costs for terrestrial broadband increase proportionately to the additional number of homes passed
Satellite is also 25 times more efficient than International Mobile Telecommunications Standard in delivering broadcast video content (volume) per unit of spectrum
SES’s fleet serves 312 million TV homes in multiple access modes, including 38 million IPTV homes, with over 7,000 TV channels. This generates over 1 Zettabyte of broadcast video annually
SES annually exchanges 57 Gbps of data traffic with the Internet, delivering around 22 TB of data to thousands of global Internet POPs
Efficiency and scalability
Convergence
1) Source: CDN delivery costs using Microsoft Azure 2) Source: BMVI
SES at a glance
World leading satellite-enabled solutions provider
Video
Fixed Data
Mobility
Government
SES focuses on four key market verticals
Operating
53
GEO satellites using over
20
global teleports,
augmented by O3b’s
12
MEO satellites
Differentiated offer combining
GEO wide beam
,
GEO High
Throughput Satellites (HTS)
and
MEO HTS
capabilities
Serving over
700
broadcasters, enterprises, institutions and
governments in over
130
countries
Reaching
312 million
TV households worldwide
Annual revenue
EUR 1.9 billion
(FY 2014)
Contract backlog
EUR 7.4 billion
GEO GEO HTS
MEO HTS
Completing and deploying a multi-layer satellite network to capture global opportunities
53 satellite constellation
Reaching 312 million TV
households worldwide
Serving multiple global data
applications and customers
Seven future satellites
adding 12% new capacity to
be launched by end-2017
SES at a glance
Providing a differentiated global offer: Infrastructure
Adding 36 GHz total Ka- and
Ku- capacity by end-2017
Global HTS platform covering
Europe, North America, Latin
America and Asia-Pacific
Reduced cost per MHz,
improving value proposition for
data applications
12 satellite constellation
Covering between 45° North
and 45° South
High throughput of over one
Gbps per beam
Ultra low latency for ‘fibre in
the sky’ type of service
Further procurements planned
Maintaining focus on developed markets and accelerating globalisation of assets/capabilities
1) SES has a 45% interest in O3b Networks
(1)
Differentiating SES globally and across market verticals, as well as generating incremental “pull through”
SES at a glance
Providing a differentiated global offer: Value-added Services
Supports broadcasters, production companies and platform operators
Range of solutions for both linear and non-linear content
Customers include: Sky, RTL Group, StarTimes, and many more
Over 3 million households(1)
using HD+ in Germany
50 HD channels, including 20 HD channels as part of the private subscription service
Facilitated more private free TV stations in HD in Germany
Over 40 years experience serving variety of DoD and other U.S. Government customers, including:
End-to-end solutions and diverse hosted payload portfolio
Working with U.S. Government to shape policy and optimise procurement practices
Systems and service provider
Develops innovative, state-of-the-art solutions and products
Satellite-enabled solutions for e-government; e-education, e-health and applications for emergency communications
High-speed broadband internet solutions via satellite
Connecting entire communities in remote areas using single satellite dish
Successful launch in Europe, and expanding network to Middle East and Africa
Part of SES Platform Services’ existing suite of services
Supporting customers in emerging markets with cost efficient solutions
Over 50 decentralised playout centres around the world
Serving over 120 channels globally … and growing
SES’s vision and strategic focus
Building future-proof differentiation
Focus on
three key
horizons
1.
Globalisation
2.
Verticalisation
3.
Dematuring the industry
Maximising
profitability
and returns
1.
Clear financial framework
2.
Consistent application of cash flow
SES’s vision
To be the foremost satellite-enabled provider of
communications around the world and an
SES’s financial track record
Delivering profitable growth though globalisation
Revenue development (at constant FX and same scope)
EUR million 0 500 1,000 1,500 2,000 2007 2008 2009 2010 2011 2012 2013 2014 Europe North America International
18%
29%
+11.1% CAGR -1.8% CAGR +2.3% CAGR (Digital +7.1%)25%
18%
57%
53%
74% (84%) 72% (82%)Group EBITDA Margin, inc. Services (Infrastructure Margin)
GEO wide beam
+ GEO HTS
+ MEO HTS
+ Services
HD growing in developed markets; Ultra HD now a reality Significant growth in TV households across emerging markets Consumers increasingly want combination of high quality linear
experience (e.g. HD and Ultra HD), complemented by OTT
SES’s key market verticals
Differentiating capabilities to optimally serve four attractive market verticals
1) SES has a 45% interest in O3b Networks
(1)
Differentiating solutions:
Focusing on four market verticals with strong long-term fundamentals:
Video
Fixed Data
Mobility
Government
Proliferation of global data usage/applications
Users want higher speeds and uninterrupted coverage HTS enables higher throughput and lower cost per bit
Strong growth in ‘bring your own device’ usage
Commercial mobility expanding domestically, and Internationally GEO/MEO HTS key enablers, complementing wide beam
Increasing use of high-bandwidth satellite-based applications USG demand for COMSATCOM remains strong
SES’s key market verticals
Strong growth foundations developed across all verticals
Over 30%
of SES channels now in HD (rest of world: 19%)
21 million
(+7%) additional households served by SES since 2014
40
Pay TV and free-to-air platforms now supported by SES
Seven
satellite operators/TV manufacturers now part of the SAT>IP Alliance FLUID HUB already supporting20
video on demand portals (launched Q2 2015)
50%
increase in “pull through” revenue from SES Platform Services since 2012Video
‘Tier One’ (e.g. Airbus, Orange, Telefonica) grown (YOY) from
~30% to over 40%
of Fixed Data 3x
number of SES managed IP platforms and average bitrate grown from 4 Mbps to 12 Mbps (vs. 2013) 3x
number of ‘virtual networks’ supported by SES over the last two years
Over one million
simultaneous fixed internet connections reached by SES’s global fleet
GEO/MEO complementarity
with Digicel, PNG, RCS using both SES and O3b capacityFixed Data
+23%
Channel growth in last three years (rest of the world)
+36%
Channel growth in last three years
SES’s key market verticals
Strong growth foundations developed across all verticals
Government
Five
new government regions served in the last year (including Niger, Kenya and Italy) Doubled
hosted payloads agreements in 2015 (EGNOS-I, EGNOS-II, WAAS and GOLD) Seven
new U.S. Government customers under contract since last year Increase in UAV/ISR traffic supported by SES
Non-U.S. Government revenue doubled from
~1.5% to ~3%
of total revenue in last three yearsMobility
Serving
all three
major global inflight connectivity providers (Global Eagle, Gogo and Panasonic)
+100%
growth in SES capacity contracted by Global Eagle Entertainment in last 12 months Up to300,000
airline passengers served by SES satellites today
4 Gbps
potential in-flight bandwidth deliveryFour RCCL/O3b ships
have more bandwidth than the entire maritime industry combined Up to
2,000
SES’s Next Generation Video positioning
Significantly improving technical reach
SES’s significant and growing technical reach 2014 vs. 2013
(1)Millions of TV households Europe
154m
+3m North America84m
+9m Latin America24m
+1m Africa7m
+6m Asia-Pacific44m
+2m
Technical reach of 312 million TV households; represents 1.1 billion people
SES’s Next Generation Video positioning
Delivering higher quality via HD TV growth
SES’s growing channel count
(1)Number of TV channels broadcast over SES’s fleet
SES satellites broadcast 25% of the world’s satellite HD TV channels
1) Source: Lyngsat, SES analysis
7,115 2,178 0 2,000 4,000 6,000 8,000 Q3 2012 Q3 2013 Q3 2014 Q3 2015
Total TV channels HD TV channels
5,237
1,410
5,967
6,416
Global TV channels broadcast over satellite
(1)Market outlook: Video
Consumers want a higher quality experience with more choice
Total (2014)
~38,700
Total (2024)
~48,500
(+1.3x)
Higher quality video formats (HD and UHD) require more satellite capacity than SD
UHD and 3D ~750 (+21.8x) HD ~22,300 (+2.8x) SD ~25,400 (-1.2x) HD ~7,800 SD ~30,900Market outlook: Video
Linear TV remains the principal viewing platform
Average daily viewing time per individual
(1)Minutes
Linear vs. non-linear consumption 2014
(2)Minutes 100 150 200 250 300 2003 2005 2007 2009 2011 2013 Worldwide Europe North America
293 232 226 221 244 26 19 18 5 7 0 100 200 300
U.S.A. U.K. France Germany Spain Linear Non-linear
1) Source: Mediametrie/Eurodata TV 2) Source: Eurodata TV, IHS
Projected global IP traffic demand
(1)Data traffic by region
(1,2) Gigabytes per capita per month worldwide Exabytes per monthMarket outlook: Fixed Data
Broadband becoming a universal requirement
0 5 10 15 20 25 2014 2016 2018 2020 0 50 100 150 200 2014 2015 2016 2017 2018 2019 Asia-Pacific
Projected peak throughput per aircraft
(1)Aeronautical connectivity
(2)Mbits per second FSS in-service units (planes equipped)
Market outlook: Mobility
Growing demand for connectivity anytime and anywhere
1) Source: Gogo, SES Analysis
2) Source: NSR (Ku-band and HTS in-service units)
0 20 40 60 80 100 2011 2012 2014 Future 0 5,000 10,000 15,000 20,000 25,000 2014 2016 2018 2020 2022 2024
U.S. DoD spending
(1)UAV/ISR platform bandwidth consumption
(2) USD billion (at constant FX) Mbits per secondMarket outlook: Government
Governments expanding their data requirements
Predator
3-5
Mbits
Reaper
5-10
Mbits
Global Hawk
10-50
Mbits
0 250 500 750 2006 2008 2010 2012 2014 2016 2018 2020Base Budget Overseas Contingency Operations
Five commercial UHD channels and four SES demo channels launched
• Europe’s first commercial UHD channel (pearl.tv)
• World’s first global commercial UHD channel (Fashion One 4K)
(1)Six commercial UHD agreements secured YTD 2015
SES Dematuring the industry
Achieving important milestones for Ultra HD’s commercial introduction
Satellite-enabled solution to complement linear experience, with non-linear capabilities
Delivering satellite signal to any connected IP device
SAT>IP Alliance established to encourage SAT>IP’s development and adoption
SES Dematuring the industry
SES-12, SES-14 and SES-15 HTS spot beam footprints
SES Dematuring the industry
Building a global GEO HTS platform for Next Generation Data and Mobility
SES-15 (129° West)
Up to 10 GHz HTS
Launch in H1 2017
SES-14 (47.5/48° West)
Up to 12 GHz HTS
Launch in H2 2017
SES-12 (95° East)
Up to 14 GHz HTS
Launch in H2 2017
unique coverage from Medium Earth Orbit (MEO)
(1) Fastest growing satellite network in terms of capacity contracted
‘Fibre in the sky’ network now serving 40 customers across 31 countries
Seven of O3b’s first eight customers have already upgraded their bandwidth requirements
O3b’s contract backlog has grown by 48% since July 2013 to over USD 530 million (as at June 2015) Current 12 satellite constellation capable of delivering over 190 Gbps of total capacity
SES Dematuring the industry
SES Dematuring the industry
Complementing SES’s GEO assets through investment in O3b
1) 600 Mbps x 2 (Uplink / Downlink)
SES has a 45% interest in O3b
12 Medium Earth Orbit (MEO), super HTS satellites
Covering between 45 degrees North and 45 degrees South
Target markets include over 3 billion people
High throughput of over 1 Gbps per beam(1)
Ultra low latency (less than 150
milliseconds) providing ‘fibre in the sky’ service
Broadcast
Enterprise VSAT
Mobile backhaul 2G
Mobile backhaul 3G/4G
Oil & Gas, Mining
Trunking
Consumer broadband
Aeronautical
Maritime
U.S. Government
International
SES’s Next Generation Data positioning
HTS (GEO & MEO) appeals to a range of customers
YTD 2015 Results
Financial highlights (nine months ended 30 September 2015)
YTD 2015
EUR million
YTD 2014 EUR
million
Growth as
reported
Growth at
constant FX
(1)Revenue
1,492.6
1,406.6
+6.1%
-2.9%
EBITDA 1,106.5
1,049.7
+5.4%
-3.6%
Profit after tax
(2)473.5
456.8
+3.7%
n/a
1) At constant FX refers to the restatement of comparative figures to neutralise currency variations and thus facilitate comparison 2) Profit before share of joint ventures and associates’ result and non-controlling interests
Diversified, global revenue profile driving increase in reported revenue and profit
Revenue flat (at constant FX), adjusting for txps sales, AMC-15/-16 renewals and ARSAT migration impacts
• Growing in three of SES’s four key verticals (Video, Mobility and Government)
• Fixed Data decline due to FX impact on certain customers; trend stabilising with Q3 2015 revenue higher than Q2 2015
Share of associates loss EUR 95.5 million, primarily due to non-cash expenses associated with O3b
YTD 2015 Results
Regional revenue developments
Further growth in Services and Infrastructure revenue Final four txps sold to ETL (YTD 2014: eight txps sold) UHD agreements with pearl.tv, TERN and Sky Deutschland
StarTimes additional capacity and services for DTH in Africa Major mobility contracts with GEE and KVH
Offset by transition of ARSAT capacity to own satellite and impact of stronger USD on certain Fixed Data customers
Two U.S. Government-funded hosted payloads
UHD agreements with Fashion One, High 4K TV and NASA UHD Impact of AMC-15/-16 capacity renewal agreements
North America
International
EUR
760.1
million
+0.3%
as reported(1)+0.4%
at constant FX(1)Europe
EUR
292.8
million
+15.8%
as reported(1)-4.1%
at constant FX(1)EUR
439.7
million
+11.1%
as reported(1)-7.3%
at constant FX(1)YTD 2015 Results
Robust financial and operational metrics
As reported
YTD 2015
YTD 2014
YTD 2013
EBITDA margin 74.1% 74.6% 73.2%
- Infrastructure 84.0% 84.2% 83.6%
- Services 16.2% 16.2% 15.9%
Contract backlog EUR 7.1 billion EUR 7.3 billion EUR 7.4 billion
Net debt to EBITDA 2.62 times 2.87 times 3.01 times
Weighted average interest rate 3.77% 3.84% 3.92%
Weighted average debt maturity 8.5 years 8.8 years 5.9 years
Available transponders(3) 1,502 1,534 1,469
Utilised transponders(3) 1,086 1,110 1,088
1) At constant FX
2) Excluding loan origination costs and commitment fees
3) 36 MHz equivalent. Excluding satellites in inclined operation, for which pricing is lower than station-kept operations
Operating expenses flat(1)(YOY) and infrastructure and services margin remain robust
Financing costs benefiting from refinancing activity over the last two years, while maturity improved Utilised capacity grew by 20 txps (YOY), excluding NSS-7 and ARSAT migration
2016
2017
2018
Global Video
Next Generation Data
and Mobility
Next Generation
Government
‘Fibre in the sky’
SES-9 (Asia-Pacific) and SES-10 (Latin America)
80 incremental transponders with anchor customers
SES-12, SES-14 and SES-15
Global HTS platform (36GHz)
SES-16/GovSat
68 incremental transponders
O3b Networks
(1)12 satellites with further procurements to come
SES’s solid medium-term growth drivers
Seven satellites scheduled to be launched by end-2017
Incremental capacity (36 MHz equivalent)
SES’s next generation satellite fleet
Increasing total capacity by 12%; and International by 21%
Europe North America (+16) International (+164)
SES-9 Q4 2015(1) SES-10 H2 2016 SES-11 H2 2016 SES-16/GovSat H1 2017(2) SES-15 H1 2017(1) SES-12 H2 2017(1) SES-14 H2 2017(1) Total End-2017
+53
+27
+0
+68
+16
+8
+8
+180
1) SES-9, SES-12, SES-14 and SES-15 will be positioned using electric orbit raising, with entry into service some four to six months after launch date 2) Procured by LuxGovSat
Plus
36 GHz
total HTS capacity(Broadly equivalent to ~250 TPEs, assuming 4 MHz of SES-12/-14/-15 HTS capacity =
Capital Expenditure profile
EUR million
781 631 362 288 480 540 365 40 54 60 57 59 60 60 60 60 60 80 70 350 390 0 300 600 900 2011 2012 2013 2014 2015 2016 2017 2018 2019Committed and uncommitted CapEx for
replacement and incremental growth capacity Committed and uncommitted non-satellite CapEx (infrastructure and services) Estimated uncommitted replacement and incremental growth capacity
540
680
495
450
450
At 24 July 2015: 580 650 495 450 450
Total 2015-2019: EUR 2.6 billion(1)
Changes to CapEx profile primarily due to impact of launch delay
SES’s future CapEx profile
Current (2015)
Change vs. 2014
Primary mission satellites
32
-14%
Average cost per satellite
EUR 224 million
+2%
Assumed design life
15 years
-“Normalised” satellite CapEx (annual)
EUR 475 million
-12%
Non-satellite CapEx (annual)
EUR 60 million
-Scope change (SES-16 & HTS, annual)
(1)EUR 40 million
n/a
SES’s future CapEx profile
Reducing normalised CapEx requirement
Economies of scale and design reducing total satellites required to maintain existing traffic
Well on track to deliver targeted savings of up to 20% by 2018
Economic scope extension of growth capacity for new opportunities (e.g. HTS / SES-16)
Further 20 secondary mission/inclined satellites for incremental revenue opportunities
Providing the basis for solid financial ratios and strong balance sheet metrics
SES’s strong financial capabilities
Sound and consistent financial framework
IRR hurdle rates
(organic & inorganic)
1
Current/target
EBITDA margins
2
Debt and Interest
3
Effective tax rate
4
Over 10% for Infrastructure
(1)
Over 15% for Services
(1)
Over 82% for Infrastructure
14-18% for Services
Net Debt/EBITDA ratio below 3.3x
Long average maturity of 8.7 years; low average rate of 3.8%
(2)
Balance of EUR/USD debt around 55%/45%
Ratio of fixed/floating rate debt around 90%/10%
25% Return on Equity reflecting profitable growth and leverage of share base
Return on Invested Capital well ahead of SES’s WACC
1) Excluding assets under construction 2) NOPAT/Equity
3) NOPAT/(Equity + Debt)
FY 2004
FY 2014
Net income
EUR 341 million
EUR 601 million
+5.8% CAGR
Free cash flow before financing
EUR 487 million
EUR 738 million
+6.8% CAGR
Total assets
EUR 6.9 billion
EUR 10.0 billion
+3.8% CAGR
Net Debt/EBITDA ratio
2.16 times
2.77 times
+61 bps
Return on Tangible assets
(1)13%
18%
+500 bps
Return on Equity
(2)10%
25%
x2.5
Return on Invested Capital
(3)6%
10%
+400 bps
SES’s financial track record
SES’s financial track record
Profitable top-line growth
Revenue (at constant FX and same scope)
EBITDA (at constant FX and same scope)
EUR million EUR million
0 500 1,000 1,500 2,000 2007 2008 2009 2010 2011 2012 2013 2014 Infrastructure Services 0 500 1,000 1,500 2007 2008 2009 2010 2011 2012 2013 2014 Infrastructure Services
Strong revenue growth reflects organic infrastructure and services growth
EBITDA growth outstripping revenue due to margin improvement from 71.7% to 74.4%
23%77% 14%
SES’s financial track record
Growing cash flows support future profitable growth
Free Cash Flow (before financing activities)
EUR million and % of Group revenue
EBITDA growth (+3.9% CAGR), high cash conversion rate (85-90%) and lower CapEx
31% 24% 16% 11% 13% 29% 39% 39% 0 300 600 900 2007 2008 2009 2010 2011 2012 2013 2014SES’s strong financial capabilities
Consistent approach to application of cash
Fund current
business plan
1
Current replacement requirements
Existing pipeline of organic growth opportunities
Annual dividend
2
Maintaining a progressive dividend
Growth rate assumption annually validated
Growth investments
(organic & inorganic)
3
IRR hurdle rate of >10% for Infrastructure; >15% for Services
Potential M&A (minimum hurdle rate applied)
Potential to move to control of O3b Networks
Share repurchases
This presentation does not, in any jurisdiction, including without limitation in the U.S., constitute or form part of, and should not be construed as, any offer for sale of, or solicitation of any offer to buy, or any investment advice in connection with, any securities of SES, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever.
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This presentation includes “forward-looking statements”. All statements other than statements of historical fact included in this presentation, including without limitation those regarding SES’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to SES products and services), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of SES to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding SES and its subsidiaries and affiliates, present and future business strategies, and the environment in which SES will operate in the future, and such assumptions may or may not prove to be correct. These forward-looking statements speak only as at the date of this presentation. Forward-forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. SES, and its directors, officers and advisors do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
