Sesa Spa

Hello and welcome to the year-to-date 2023 results SES SA announces financial results for the 9 and 3 months and the 30th September 2023. My name is Laura and I will be a coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, Richard Whiting, Head of Investors Relations, to begin today's conference. Thank you.

Thanks, Laura. Good morning, everyone. Thanks for joining this analyst and investor call for our year-to-date 2023 results. We appreciate you accommodating the change of date given the material agreement just signed. This morning's presentation was uploaded along with the press release to the investor section at SES.com if you don't already have it. And as always, please note the disclaimer at the back of the documents. In a moment, Rui Pinto, CEO, will present the main business highlights, followed by Sandeep Jalan, CFO, to cover the financials in more detail. After some closing remarks from Rui, we will take your questions. And on that note, let me hand over to Rui.

Thanks, Richard. Good morning, everyone. Again, our apologies for changing the date, but we wanted to give you an Empower update that is material for our company, and that justifies just advancing it by a couple of days. So please, starting on page three, let me go through the highlights of our announcement. I'm really pleased that our year-to-date financial performance has been good, solid and good. Our networks business has delivered growth on the back of positive outturns across each of the three sectors, government, global in the U.S., mobility, and fixed data enterprise and cloud. Also, on our media video segment, our revenue performance was consistent with our expectations, and we have signed and are signing important long-term news across our valuable TV neighborhoods. A couple of examples, Telefónica in Spain, Canal Plus in Africa, and I'll elaborate a little bit more during the call, but it's a really good performance from our video team. Therefore, we are on track to deliver our full year 2023 financial outlook. And I have to say that it's really pleasing to see that result. I'm also delighted to announce that following the FCC certification of our phase two USC band clearing, we have now collected the incentive payment of $3 billion gross pre-tax. This is a true milestone. We have been working on it for quite some time, as you all know. We enabled the accelerated deployment of 5G service in the US while preserving our key customer services and realizing substantial value to the company. And having that milestone ticked off is really a feather in the cap of the team that achieved it. We're already putting a portion of these proceeds to work in a very disciplined way. We announced the share-by-back program of up to €150 million, and we intend to start executing on that program with practically immediate effect in November 2023. At the same time, we have decided to call the hybrid bond of €550 million in line with our objectives of reducing leverage and lowering our overall cost of debt. If we could please move to page four, and I'll jump straight to the Empower update. And let me start there. On one hand, it's disappointing that we are not being serviced as early as we would have hoped. But clearly, we as a company have to get this right. And we work hard and extensively with our partner supplier, Boeing, to make sure that, one, we understand the causes of the phenomena that we have observed in space. And two, and more important, that we have a solid plan moving forward to deploy the Empower constellation. We have made a lot of progress towards identifying the causes of the Empower module issues that I have mentioned back in August. With four satellites in orbit, we collected, quite frankly, a really good amount of data. And we're now in a position to not only understand what is happening, but also to have a technical fix for the problems. I also have to say that after this assessment and investigation over the last few months, we determined that the initial satellites in orbit, we will have a significant reduction in anticipated operational lives and available capacity. However, one of the beauties of these extremely flexible software satellites is that we can trade that. In other words, if our model indicates that we are being, for example, pessimistic on the longevity of these satellites, we can trade that by adding capacity to the constellation and vice versa. This flexibility allows us to be confident that we can start our service in early Q2 2024. Importantly, and I should mention that very clearly, we expect that with the mitigations in place, our existing O3B meal constellation customers will be supported, as well as the O3B Empower customers. We still room for further customers and market growth from early Q2 next year. We always like to keep, personally, a bit of margin, but this may be as early as April if our tests continue to proceed as we planned. However, it's a little bit later by a quarter than what we planned before. Therefore, you know, we have to adjust the expectations that you all have on the start of service of the constellations. Furthermore, we continue to work and we are going to deliver on the full life cycle capabilities of the O3BM power constellation. And we are going to be upgrading the remaining five satellites and deliver an additional two satellites with Boeing beginning not only the remedy or the fixing of the design weakness that we identified, but also the construction of two new and power satellites that will be delivered in record time. Including our agreement with Boeing, which we finalized yesterday, confident that we are going to accommodate this additional investment within our existing CAPEX envelope from 2023-2027. And this is a mix of our material agreement with Boeing, where Boeing and SES are sharing the risk, and possibly insurance proceeds, but that is still being investigated depending on the performance of the satellites in orbit. Therefore, it's expected that the impact of the O3BM power delay of one quarter will be in the order of mid-single-digit percentage lower in terms of 2024 revenue and adjusted EBITDA. However, we are not giving up on that, and there are potential mitigations. We are looking at how can we best optimize our extensive MEO and GEO fleet so that we serve our customers and preserve as much of our revenue. We are preserving our backlog of of sizable and important customers. And there are a number of strategic programs that we are working on, some of them you know, that may help us mitigate the impact of this delay. This is a solid plan. We are confident on that plan. And it will enable our customers to already benefit from those 3BM power systems from early next year, from Q2 next year. and it will focus on delivering a capable system to the market which should be the bedrock of the long-term success of our networks business as one example and to allay say maybe some of the possible concerns we have done a successful demonstration of empower f1 and f2 in india at the india mobile congress with our partner alliance geo they branded this the geospace fiber and we have demonstrated gigabit per second capabilities for a number of remote sites alongside CHEO, including a demonstration to Prime Minister Modi, and that was just last week. So this was actual data, actual satellites, actual demo, demonstrating the capabilities of the Empower constellation in orbit as we had planned. So on that note, let me move quickly to the key elements of our year-to-date performance. On the next slide, please. Our revenue of 1.5 billion euros year-to-date is fully in line with expectations. In the last nine months as well, we have signed a total of 1.3 billion euros of contract renewals and new business wins across the group. I couldn't be more pleased with that outcome given the fact that competition is intense in all our sectors, certainly on the network side. This result includes 835 million euros of revenue on the three network verticals. A couple of notable wins are the Mexico CSE program using SCS17, and it's a pleasure to be able to help with digital inclusion in Mexico. We have had several U.S. current awards. One that is notable is the Air Force Ducey program that we have won. And there are other deals as well in the aviation cruise customers section as well. We also did sign a partnership with Starlink, which benefits our customers and increases our market penetration in the cruise sector, and we are very proud of that. This is all complemented by 445 million euros backlog that we have secured in video. Notably, some multi-year transponder renewals with Telefonica in Spain, the successful expansion of UKTV until the end of the decade, the renewals of Canal Plus in Africa, renewals of QVC, RTL HD Plus, and a number of others. Our media video team has been very diligent and disciplined in trying to withstand market pressure in terms of price, and even sometimes being able to index some of our contracts, and that's a good outcome. We're also maintaining a strong grip on costs, and discretionary spend with an adjusted EBITDA of 792 million euros. If we could move down to page six, please. Third quarter revenue grew 8.6% year-on-year for networks, and it's really good to see the rebound on government, 15% year-on-year. It's a priority sector for us, where we feel that we have differentiated capabilities. This resulted in year-to-date results being 5% higher than in 2022, including growth in all three verticals. You can also spot from the bullets that the sector where we have more intense competition is fixed data, but even there, we achieved a 2.3% year-on-year growth. If we move on to page seven, please. On the video side, as I trailed just before, We are tracking really well against forecast. We saw a reduction of 2.5% year-on-year in the third quarter. That contributed to the last nine months underlying a revenue closing of 3.2% lower versus 2022. These are secular trends that we are all familiar with, and we believe that we are better than the competition, certainly this year. These trends continue to be largely lower volumes in mature markets with pricing stable to increasing and contract duration remaining very healthy and strong and long. The small sector of sports and events is one that we are very proud of because we are seeing a lot of growth in there, including a contract with FIFA that is notable that we managed to get. With that, I'll hand over to our CFO, Sandeep, to give more details on the financials, please.