Sesa Spa

Hello and welcome to the SEF Q1 2025 results. My name is Laura and I will be your 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 questions. 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, Christian Kian, Head of Investor Relations, to begin today's conference. Thank you.

Thank you, Laura. Good morning, everyone, and thank you for joining us today. My name is Christian Kern, Head of Investor Relations, and it is my pleasure to welcome you to SES P1 2025 results call on behalf of our management team. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document has been prepared under international financial reporting standards. As usual, this presentation may contain announcements that constitute forward-looking statements, which are no guarantees for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several effects. We invite you to read the detailed disclaimer on page two of the presentation, which is also available on our company webpage. Today, I'm here and joined by our CEO, Adel Alsaleh, and our CFO, Sandeep Jallon, We will take you through this presentation, followed by a Q&A session. Adel, with no further ado, over to you, please.

Great. Thank you, Christian. Good morning, everybody. Starting with our Q1 highlights on page number three, we had a solid start to the year and are on track for our reaffirmed full year 2025 financial outlook, underscoring that our evolved strategy is delivering positive operational and financial results. We continue to have commercial momentum across the business, which demonstrates the growing demand for our differentiated solutions. The transformation and value accretive Intelsat acquisition is progressing well and is anticipated to close in the early part of second half of 2025. Looking at the financial highlights on page number four. As we expected, the first quarter of the year produced a solid set of results with revenue stable year on year, reflecting strong operational execution led by the network growth of 8.4% year-on-year, including some periodic revenue. Q1 2025 adjusted EBITDA was also in line with our expectation, broadly stable year-on-year with a 55% margin, including flow-through of periodic revenue impact and some shifts in cost as well as lower margin equipment sales to outer quarters. This was supported by solid growth in networks and nearly 6% reduction in controllable operational expenses. As we continue to transform and drive operational excellence throughout the business. In Q1 2025, we secured €360 million of renewals and new customer contracts, with a majority coming from our growth segments, supporting a gross backlog of €4.5 billion. Our net leverage is 1.2 times, including 3.1 billion euro of cash and cash equivalents. On page number five, we continue to strengthen and build on existing and new partnerships in our chosen markets and seeing increased demand for our differentiated offering. We're proud to be a trusted partner in the government sector where we started to see increased demand from the recent changes in the geopolitical landscape. This is for example, demonstrated by key contracts like the 200 million NATO MGS contract, the U.S.-European Command Blank Purchase Agreement, and the Iris Square Contract Award. On the MGS contract, which you've heard from before, we're proud to have had the Netherlands joining the MGS agreement. The addition of Netherlands reflects the growing strength of our partnership with NATO. With O3D empowered, low latency, guaranteed SLAs, flexibility, and security, we're proud to begin delivering connectivity to the MGS founding nations and new members under the NSPA agreements. These agreements enhance secure, resilient, and high-performance connectivity for NATO members and U.S.-European command, while expanding our global MEO offer. Our strategic wins underscore our commitment to delivering innovative solutions and driving growth in the government business. With IRIS Square, we're well poised for the future of connectivity. In April, we have successfully completed the kickoff phase of the EU's IRIS Square program, reinforcing our leadership in providing sovereign, secure European connectivity from space. In Q1 2025, we're proud that another airline, Uzbekistan Airways, selected our open orbits offering to our participating partners. Uzbekistan Airways will integrate the SES open orbits network in its in-flight connectivity. In addition, TAI Airways plans to expand its use of SES open orbits on its future aircrafts. Wins like this are driving our future growth in aviation, where our ability to deliver managed multi-orbit solutions is a source of strength, anchoring our right to win in this competitive segment. Our continued success in maritime, driven by sustained demand from new builds from our customers like MSC, Princess Virgin, and others, showcases our strong positioning in the ocean ship segment. This is thanks to our end-to-end multi-orbit service with managed meal-based networks as a cornerstone of their passenger connectivity experience. In fixed data, we're setting up our differentiated capabilities for future growth with innovative partnerships such as the Link Global Indirect-to-Device, which will allow SCS's customer to benefit from a broader range of applications, including remote access, mission-critical first responder, and secure government communications, offshore and automotive connectivity. And in media, we're proud to have signed up ATP, a major sports media organization, SES's centralized platform will allow ATP Media's broadcast partners to easily procure, encrypt, and customize their content for the local distribution. This partnership will enable 1 billion global fans to be watching over 3,000 tennis matches in the coming year. This quarter, we have also signed Mileto in Brazil, a contract which over time has the potential to grow and mitigate some of the capacity revenue lost to a customer bankruptcy as announced last year. These wins demonstrate the sustained relevance of our satellite offering for media applications. Moving on to the vertical performance, starting with our network business on page number six, where we have demonstrated our ability to win with our Moped Orbit solutions. Let's start with the government business, which is showing strong growth, up by more than 13% year-on-year, driven by expansion in both the U.S. and global government businesses. Our mobility business is almost 9% year-on-year with double-digit growth in aviation and complemented by growth in maritime, including periodic revenue related to a contract modification of 19 million euros for Q1 2025. and a 22 million recognized in Q1 2024, which we announced before. Mobility excluding this periodic effect showed a strong performance of 18% growth year on year. Due to continued capacity constraints of our O3B and power fleet and the competitive nature of the segment, our fixed data business is down 2% year on year, performing to our expectations as the trend begins to improve. As we increase our available capacity on the Empower constellation, we expect fixed data to continue to improve throughout the year. Finally, network growth backlog stands at 2.5 billion euros, having secured 276 million of new business and renewals this quarter, with a strong US and global government pipeline. Our growth backlog and pipeline are supporting our forecast and future growth, demonstrating that our strategy and our multi-orbit solutions are critical components of market requirements. Moving on to page number seven, and our high-cash generated media business. As expected, the media business continued to decline by minus 10.6% year-on-year in first quarter, on the back of lower revenue and mature markets due to capacity optimization and the impact of SD channel switch-offs, as well as the impact of the Brazilian customer bankruptcies. We have secured 84 million of renewals and new agreements, underscoring the significant cashflow generation of our video business and contributing to our gross backlog of 2 billion euros, serving 362 million homes across the world. The revenue and operational performance reflect the robust fundamentals of this business and customer demand. We continue expanding our services to a comprehensive approach in the media service market by combining our traditional capacity business with added ground services and managing more of the distribution chain to reduce complexity for our customers. Moving on to page number eight, and the deployment of our O3B Empower constellation, which will support our revenue growth as we try to keep up with the demand. As you know, 2024 was a very important landmark year for our Empower new constellation. where it entered commercial services. We're proud to say that O3B Empower deployment remains on track with Satellite 7 and 8 having reached their final orbital position and have been fully tested. They will enter commercial operations beginning of May, which is in just a few days. This type of service of Satellite 7 and 8 is expanding the capacity and resilience of the constellation and bringing much needed capacity will receive more demand than what we can serve today. Satellites 9 to 11 will follow the summer launch and will increase our capacity even further from the beginning of 2026. The final O2B-MVAR satellites, which is 12 and 13, will be launched in 2026. Overall, this represents a threefold capacity increase compared to today. when the constellation is fully operational in 2027, and will accelerate revenue ramp up of our MEO constellation. In 2027, we will manage our robust constellation of seven fully operational satellites, complemented by the initial six satellites. The scalability of our MEO network allows us to regularly add satellites incrementally, ensuring capacity growth aligns with customer demand, while maintaining a balanced supply-demand ratio in a capex-efficient manner. Each new satellite enhances the constellation, boosting overall capacity and network efficiency to support long-term profitable growth. Iowa Square is strategically timed to commence services by 2030, coinciding with Empower's steady-state operations. Together, they will meet growing demand well into the next decade. Additionally, Iowa Square will expand coverage beyond Unpower's reach today, unlocking new opportunities for meal-based services in previously inaccessible regions, including seamless pole-to-pole coverage. On page number nine, I would like to talk about our differentiator, our integrated holistic multi-orbit network. At ICS, Our integrated multi-orbit architecture is not just a technical jargon or technical achievement. It is a strategic advantage that delivers advanced performance, global reach, and future-ready flexibility for our customers. We leverage full ownership economics in GEO and MEO, combined with strategic partnerships in LEO, and our vast ground network and terminals portfolio to provide high availability and match resilience, network density, and seamless interoperability across orbits. With complete control over our assets on the ground, in geostationary and medium Earth orbits, we ensure secure, scalable, bandwidth and optimized cost structures essential for mission critical and high throughput applications. Through key alliances and partnerships in LEO, we extend our reach and enhance agility in our services portfolio without the significant capital expenditure of owning a LEO infrastructure. By securing access to a GEO, NEO, and LEO orbital architecture in space, we are integrated with a pervasive and robust global ground network. Combined with an intelligent digital layer of networking software, this allows our customers superior ingress and egress bandwidth, latency, coverage, density, security, and reach. When this network is finally accessed via a diverse portfolio of end-user terminals, which are optimized for our government, maritime, aviation, and fixed data customers, we are delivering a unique and enhanced connectivity experience for them. Our multi-orbit network is designed for what matters most, performance without compromise, whether for governments, mobility, or fixed data. We're enhancing our service offerings, including smart routing, dynamic traffic steering, quality of experience, management, and preparing for 5G NTN seamless connectivity. With IOSquare, our area of coverage will expand to a global full pole-to-pole coverage, provide resilience with multiple satellites in view, and more importantly, drive user terminal small form factors for any easy install with meeting customer use cases needs. Ensuring customer remains connected wherever, whenever, and however they need. On page number 10, an update on our transformational agreement to acquire Intelsat. On the regulatory front, we continue to make good progress with smaller regulatory clearances completed, including Brazil. Remaining clearances are progressing as well, and we continue working with major administration and regulatory bodies. That includes FCC, Department of Justice in the United States, European Commission, and CMA in UK, as well as close with this process as quickly as possible. We also made an F4 filing with the FCC last week, which is public as of yesterday, including pro forma financials for the combined company for financial year 2024. and an indicative IFRS valuation of the CDRs to be attributed to Intelsat shareholders in the context of potential additional C-band clearing. This has been required to meet SEC registration requirements and does not in any way suggest the actual outcome of a process or any proceeds for the clearing of the upper C-band as ordered by the SEC. Sandeep will explain a lot more on this topic in a few minutes. Closing on the acquisition remains on track to complete during second half 2025. With detailed planning for synergies ready to be executed and all financial objectives for the combined company reaffirmed. Given how well we're progressing, we'll be looking to close the acquisition in the earlier part of second half 2025 rather than later. Moreover, SCS submitted its comments to the FCC's draft notice of inquiry proposal. what's called NOI, for further C-band clearances yesterday on 29th of April. Reply comments are due in 30 days. FCC's objective continues to be to move fast in clearing additional C-band spectrum, and SCS is working closely with the FCC to meet its objectives of finding more intensive uses for the spectrum while protecting incumbent users, both in-band and in-adjacent bands. SAS welcomes the opportunity to work with the stakeholders to ensure a successful outcome that protects incumbent services while advancing the rollout of newer technologies and will continue cooperating with the FCC to support their objective while ensuring best outcome for our clients in North America and for us as well. Moving to page 11, I would like to reiterate the combined company growth outlook and the value accretion of this transaction. The combined company will be strategically positioned to offer comprehensive end-to-end solutions in high value, high growth markets. This integration will establish a strong competitor with a financial capability to invest in future opportunities, maintaining our investment grade metrics and delivering attractive returns to our shareholders, creating a stronger, more competitive multi-orbit operator with an improved financial position and cash generation profile. Intelsat transaction is highly synergistic. We continue to make great progress on the integration plan, which has been validated by both teams from both companies to deliver conviction case synergies of 2.4 billion euro NPV and the execution timetable of 70% of these synergies by the end of the third year with an opportunity to accelerate our timeline from day one closing. With over $8 billion of combined gross backlog, 60% of the combined revenue to be in the growing network segment, driving top line expansion and strengthening our position as a top tier player. The combined company is on track to grow adjusted free cash flow to over $1 billion before Iowa Square by 2027-2028 and delivering significant value for our shareholders. With that, I'll hand over to Sandeep to take you through the financial highlights.