SES quietly slipped out the news a few weeks ago that it will no longer tell analysts what revenue O3b is generating. Given that O3b accounts for 20% of most analysts forecasts this seems very defensive – but for good reason.
SES is believed to have bought out minority holders last year because lenders demanded repayment from the proceeds of the insurance claim on the first four failed satellites. No-one else would put money in because in the prior year revenues were below $60m. That is poor for a company with over $2bn capex deployed since it began in 2008, and no better than much smaller Ka band (but GEO) rivals Yahsat (commercial revenues, excludung their UAE sovereign defence PFI contract of approx $45m) and Avanti approx $65m – both firms also struggling but also with half the capex of O3b.
We also know that O3b has been selling data services on the SES Geo fleet – so there is a big question to ask about how much of that revenue even came from O3b. One source believes O3b only has about 100 active customer sites
SES is now sweeping O3b firmly under the carpet and investors would do well to respond accordingly and strip O3b cashflows out of their models.