Sesa Spa

Hello and welcome to the SES Year to Date and Q3 Results 2024. 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 and remote. 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 zero and you will be connected to an operator. I will now hand you over to your host, Richard Whiting, Head of Investor Relations, to begin today's conference. Thank you.

Thanks, Laura. Good morning, everyone. Thanks for joining this analyst and investor call for the year-to-date and Q3 2024 results. The presentation was uploaded along with the press release to the investor section at SES.com if you don't already have it. As always, please note the disclaimer at the front of the slides. The agenda today is as usual. In a moment, Adele Arcella, our CEO, will present the main business highlights, followed by Sandeep Jalan, CFO, to cover the financials in more detail. After some closing remarks from Adele, we will take questions. With that, let me hand over to Adele.

Thank you, Richard. Good morning, everyone. Starting with the highlights on page three, I'm pleased to report another solid operational and financial performance. We're tracking to the top end of 2024 outlook, supported by a wave of strategic wins and overall strong commercial momentum. showcasing the growing demand for our differentiated solutions across all verticals. The deployment of our Empower MEO constellation is also on track, and the award of the Iris Square concession will drive the next stage of our MEO growth in the future. Lastly, the regulatory process to complete the highly value-accretive Intelsat acquisition is proceeding well and is fully on track. Looking at the financial highlights on page number four, Revenue and adjusted EBITDA were in line with our expectations. With 3% year-on-year growth in the networks and nearly 4% reduction in our controllable OPEX as we continue to drive operational excellence throughout the business. We'll continue to execute and close out Q4, delivering both revenue and adjusted EBITDA at the top end of the full-year targets. We grew adjusted free cash flow by 5%, We won €900 million of customer contracts, supporting our sizable gross backlog of €4.6 billion. We continue to maintain a sector-leading investment-grade balance sheet and have underscored our commitment to shareholders with €450 million of cash returns in 2024, including the interim dividend and share buyback. Moving to the vertical results starting with page five with networks, where year-to-date revenue was up 3% year-on-year. In government, we grew 7.2% for strong progress in both U.S. and global government. The mobility growth of 5% included five single-digit expansion in aviation and cruise, including the periodic revenue booked in Q1. In fixed data, Year-to-date is minus 7.4%. The year-on-year comparison is impacted by some periodic revenue last year. However, our third quarter was 16% ahead of second quarter on the back of a new cloud revenue, and we expect fixed data to continue to improve in the following quarters. I'm also very proud of how our team showed up and supported our customers in reestablishing communication in the aftermath of the hurricanes Helene and Milton in the U.S. We made available geo and empower capacity, as well our own engineering and operations people to support reconnecting impacted communities within days. We do not typically tend to talk about that, but we're very proud of being part of the team that restores connectivity infrastructure at scale during these difficult times. Finally, Network's first backlog stood at 2.6 billion euros with 544 million euros of signings, showcasing the growing demand for our managed multi-orbit solutions, which I will elaborate on later, some of which will already be contributing to revenue acceleration in fourth quarter. Turning to our media business on page six, which has tracked well to our expectations, year-to-date, Our immediate business is at minus 5.5%, with some headwinds in first half being offset by an improved outturn in Q3, where the revenue was minus 3.1%. We expect fourth quarter to be a similar performance as in Q3, underpinning a full-year outlook mid-single-digit decline. Breaking down the segments within media, our important Duff business, which serves 18 million direct-to-home households, was flat year-on-year. Euro, our other core market, continues to perform to expectations. Meanwhile, we continue to see declines in other mature markets as expected. Our sports and events business continues to be our top performer, with double-digit revenue growth and an ever-expanding list of Tier 1 global brands. The revenue and operational performance reflect the robust fundamentals of this business, and solid customer demand with over 6,450 TV channels broadcasted with a 3% increase in our high-definition TV channels, all supportive of media solid cash flow generation. The media business cost backlog stood at €2 billion, with €355 million of new business signed, including several important multi-year renewals, which you can see on page number 7. Since July, we've announced important multi-year, multi-transponder deals with Sky, Warner Brothers Discovery, ORF, which is the public broadcaster in Austria, Telecom Serbia, and RTL. In total, we have added 355 million euros to our backlog, underscoring the solid fundamentals and long-term cash flow generation of our media business. Across Europe, we'll reach 172 million TV homes. nearly two-thirds of total households in Europe, and more than 500 million people, giving customers a valuable platform for their commitment. Let me walk you through some of these ones. First, we have renewed a multi-transponder deal with Sky UK and Ireland till the end of the decade. That's a five-year extension, providing the reliability they need to continue to deliver the market-leading TV content and demo streaming the sustained relevance of our satellite offering for media applications. On Tuesday, we announced a multi-year extension with Warner Brothers Discovery to continue distributing channels such as Eurosport in Germany and Austria. RTL extended their long-term partnership with SES by further five years for audiences across Germany and Austria. With 50% of Austrian households relying on satellites, the country's largest media provider, and public broadcasters, ORS Group, signed an extension with SES, taking services into the next decade. As you can see, we're expanding our services to a comprehensive approach in the media service market, but combining our traditional capacity business with added ground services and managing more of the distribution chain to reduce complexity for our customers. as you can see with the backup services for Sky and Telecom Serbia, as well as the uplinking and play-out services for Warner Brothers, Telecom Serbia, and RTL. We're executing on this upsell opportunity across the world. Moving on to our fast-growing government segment on page 8. Commercial satellite-based solutions with multi-orbit access are an increasingly critical component to the needs of governments and we have a strong right to win in this area, as well as shown by the important 200 million NATO MGS contract and Iris Square awards. The NATO MGS contract is the first government commitment to empire, which will consume much of the total near-term capacity to provide secure, resilient, and high-performance EU connectivity for NATO members. The contract is for the initial three years with an option to extend up to two more years. This is also the first contract within the partnership between NATO, Luxembourg, and the U.S., which makes it easier for NATO allies and partners to participate in a multinational and multi-year procurement, realizing synergies and economies of scale. Equally, I'm delighted that SES, as part of a space-wise consortium, has been awarded a strategic Iowa Square Secure Sovereign Government Connectivity Tender. The SES-led consortium will design, deliver, and operate a multi-orbit system expected to be in service from early 2030. This will bring value to the EU and its members who will be the anchor customer from the start of the service. IRIS Square will allow us to expand SES's differentiated NEO offering to keep pace with the rapidly expanding demand where we're constrained today and gives us access to NEO constellation with owner economics when needed. It further strengthens our offering by delivering a truly global NEO experience of guaranteed high throughput and low latency connectivity anywhere on land, at sea, or in the air, including the poles. further expanding our total addressable market. Cash flow and final investment levels will be finalized over the next few weeks as we negotiate the final contract with the European Commission. The contract will have an IRR in line with our target thresholds. Our commitment to investment-grade metrics and the dividend is maintained. with most of the SES CapEx investment expected to start granting in 2027, with a majority in 2028 and 2029, when the combined SES plus Intosat company will be generating significant levels of free cash flow. Given that government institutions around the world have increased their demand for secure, reliable, multi-orbit connectivity to enhance their capabilities, SES is well positioned to capture the strong demand and deliver sophisticated space-based solutions and be partner of choice to governments worldwide. Moving on to our fast-growing segment of mobility on page number nine. First, I highlight our notable wins in aviation business with our first airline customers secured for our in-flight connectivity offering. Over the words, which is a partnership between SES, Neospace, Aerosat, and Hughes. Through open orbits, we and our partners will provide seamless multi-orbit connectivity across the skies with uninterrupted coverage from east to west and delivering internet speeds of up to 300 megabits per second. Thai Airways, the national carrier of Thailand, will become the first airline in Southeast Asia using the open orbits to offer free Wi-Fi streaming while Turkish Airlines will integrate open orbits on its new fleet. SES is equipping aircrafts across the fleets with highly sophisticated multi-orbit antennas that can seamlessly support the switch between gateways in under 20 seconds and support both line fit and retrofit installations in the best integrated solutions. In cruise, We're continuing to expand our portfolio of business, which now stands at around 100 ocean ships with major brands like Carnival, MSC, Virgin, Rich Carlton, and others, driving double-digit year-on-year growth. 2024 is an important year with the anticipated introduction of Empower, who will have deployed services to around 70% of contracted ships by the end of the year. In combination with the MGS contract, This accounts for much of the MPower available capacity. I'm especially pleased with our continued success in winning new builds with the majority of the ships wanting to have our managed meal-based solutions as the cornerstone of their passenger connectivity experience. It's successes like these that have driven 11% growth annually over the past three years. and which will drive our future expected growth in both cruise and aviation, where our ability to deliver a managed multi-orbit solution is a source of strength, anchoring our right to win, even in this competitive segment. Moving to page seven. As the demand continues to grow, the deployment of Empower will allow us to sustain the revenue growth. The entry of Empower into commercial services earlier this year was a key milestone for SES, with customers now on board and benefiting from our MEO offering. We remain on track to expand the initial constellation, starting with the next launch of Satellite 7 and 8, confirmed for December this year, with expected in-service date of Q1 2025, adding meaningful increase in much-needed incremental capacity where we have more demand from customers than we have available supply to support them today. These two satellites will be followed in mid-2025 by satellites 9, 10, and 11, with a service expected to begin of 2026. Finally, with satellites 12 and 13 launching at the end of 2026, further increasing our capacity meaningfully by approximately three times compared to today. From 2027, we will have triple the available capacity, and we'll have a powerful constellation with seven fully capable satellites, plus the initial six impaired satellites as spares. One of the attractions of operating in MEO is the scalability of that network, where we can incrementally add a relatively small number of satellites on a regular basis to continue to keep available capacity in step with customer needs while maintaining a healthy tension between supply and demand, as well as being capex efficient. With every new satellite added into the constellation, the overall capacity and efficiency of the network is improved, supporting profitable long-term growth projectiles. Iris Square is a well-timed with 2030 start of service when Empower is expected to be at steady state and by then, and the combination will allow us to keep up expanding demand well into the next decade. Furthermore, Iris Square will provide coverage where Empower does not reach today, delivering the ability to provide and address demand for meal-based services in regions not possible today including pole-to-pole coverage. Finally, an update on our transformational agreement to acquire Intelsat on page 11. On the regulatory front, we're making good progress with filing processes. I'm delighted to report that we have already secured multiple regulatory clearances, including CFIUS in the U.S. and from several other FDI, antitrust and telecom clearances. Although these are relatively smaller clearances, it is nonetheless encouraging and underpins our conviction in closing the deal. There's still some way to go, but the major long-lead clearances are proceeding to our initial expectations. You will have seen that the FCC public notice period has now concluded with only a handful of comments. With closing of the acquisition on track to complete in during second half of 2025, We're also making strong progress in terms of detailed integration planning while respecting all of the legal and regulatory requirements as we continue to operate fully independently. Notably, both teams have now fully validated the target synergies of 2.4 billion euro NPV and the execution timeline of 70% of these synergies by the end of year three. The combined multi-orbit company will be well-positioned to compete with competitive end-to-end solutions in valuable growth markets where we have the light to win, underpinned by a strong balance sheet and sustained cash flow growth to drive value for our customers, employees, and shareholders, creating a strong competitor with ability to invest while maintaining our investment-grade metrics and attractive shareholder returns. With that, I'll hand to Sandeep to take you through the financial highlights.