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Hello and welcome to the SES year-to-date 2020 results call. My name is Molly and I'll be your coordinator for today's event. Please note that this call is being recorded and for the duration of the calls, your lines will be on listen only. However, you will have the opportunity to ask questions. 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 would now like to hand the call over to your host, Mr. Richard Whiting, Head of Investor Relations, to begin today's conference. Thank you.

Good morning, everyone, and thanks for joining. Our results call for the nine months ended 30 September 2020. This morning's presentation was uploaded to the investors section at ses.com this morning, along with the press release if you don't already have it. As always, please note the disclaimer at the back. In a moment, Steve Collar, CEO, will present the main business highlights, followed by Sandeep Jalan, CFO, to cover the financials in more detail. After some closing remarks from Steve, we will be happy to take your questions, where we're also joined on the line by JP Hemingway, CEO of SCS Networks. And so with that, let me hand over to Steve.

Thanks, Richard. Good morning, everyone, and thanks for joining us for our Q3 call. Let me take you through the main business highlights, starting on page three. We're pleased with our solid year-to-date performance, reflecting strong focus and execution. and the resilience of our business despite the continuing challenges introduced by the COVID-19 pandemic. As has been the case for the last three years, networks growth remained strong while video was flat quarter on quarter. Our proactive and quick response to the COVID is contributing well to lower operating expenses and good performance at the EBITDA line. As a result, we're on track to achieve our full year outlook with more than 97% of expected revenue already secured and full focus on closing out the year as strongly as possible. As we've discussed previously, and I will share more details in a couple of slides, we have four key strategic initiatives underway at SES that will create significant value, and we've made strong progress in all four areas over the last few months. In particular, the visibility of substantial CBAN proceeds continues to increase, with our transition plan fully on track, the FCC auction due to start next month, and a success milestone for realizing the first relocation payment now only 13 months away. We have a well-differentiated value proposition in our networks business, and we continue to build, and this has been sort of substantially expanded with our partnership with Microsoft Azure. Strong video neighborhoods emphasized recently by the meaningful extension of our business with Canal Plus across three satellites, and underpinned by strong cash flows and a disciplined financial policy. So turning now to the key numbers on page four, overall revenue for the first nine months stands at 1 billion, 410 million. For a third successive year, our network's business has posted strong growth, delivered revenue up 7.5%, and this despite the COVID-19 environment that's depressing demand in some of our most important growth segments. Our video business, the largest in the industry, delivered to our expectations, and we saw revenues this quarter stable with Q2. I'm pleased with the resilience that we've been able to show at the adjusted EBITDA line, including a 4% reduction in operating expense year-on-year and reflecting the strong cross-company actions that we implemented at the start of the year to protect the bottom line in the face of COVID headwinds. We've also reduced leverage year-on-year with metrics consistent with investment grade, strong liquidity, and a healthy balance sheet. So looking at the segments in more detail and starting with video on page 5, Our video business delivered results in Q3 in line with our expectations. As I mentioned, the long-term importance and resilience of our prime neighborhoods was underscored by our recent agreement with Canal Plus. I'm really pleased with the outcome of this deal with an important long-term partner covering three different orbital locations and serving more than 10 million Canal Plus subscribers. Not only have Canal Plus committed to over 230 million of incremental backlogs, but they're also consolidating a substantial part of their M7 business onto the SES network at 23.5 East, securing its long-term future and extending our relationship with Canal Plus until the end of the decade. A couple of words now about our business in Germany, a market from which we generate almost 400 million in revenue, serve 18 million households from a total of 36 million, and where we operate a brand-leading B2C consumer platform, HD+. HD Plus is an incredibly important value driver in our most important market, a market in which there's a vibrant collection of public broadcasters, commercial broadcasters, paid TV, and a significant free-to-air audience. Since the start of the year, HD Plus has seen an uptick in paying subscribers to the platform, which stands now at over 2 million. Importantly, over the course of the year, we've developed and implemented a dedicated HD Plus operator app that's now embedded directly into TV sets by manufacturers such as Panasonic and Samsung. This avoids the need for consumers to purchase modules or set-top boxes in order to receive HD+, increasing convenience and providing greater insight into consumer behavior. In fact, every third TV set sold in Germany today is already carrying the HD Plus operator app. And HD Plus is reflected of a global trend with consumers everywhere seeking the best viewing experiences and more high-definition and ultra-high-definition content where satellite is the most reliable and cost-effective means for customers to distribute their most valuable content. SES is the global leader in premium content, with further growth in HD and UHD channels to almost 3,000 in total, carried over the SES network. This is 65% more than our closest rival, demonstrating the strengths of our premium neighborhoods, which serve an industry-leading 367 million households. It's this combination of unparalleled reach and premium content that customers such as Canal Plus continue to value highly when committing to long-term contracts, as evidenced by the substantial video backlog of 3.5 billion. So, now turning to networks on page six, a network continues to be the growth engine for SES, with more than 25% growth over the last three years. Despite the challenges from COVID in 2020, growth of 7.5% year-on-year reflects the work done signing new business over the preceding 12 months, and really strong execution across our network's business unit. Our government business delivered a step up in revenue this quarter, and we achieved some breakthroughs with new applications for our MEO constellation with the U.S. government. The first is a flexible network deployed for remote austere locations, and the second is a solution to support U.S. servicemen in COVID-restricted areas, and we're optimistic that this will lead to repeat business. Another feature of networks in 2020 and one that differentiates us from our peers is the growth that we're posting in FixATA, up 6.6% year-on-year. Our partnership with INRED in Colombia is a great example of the kind of rural inclusion projects that have sustained this growth over the last several months. In mobility, we've still recorded double-digit year-on-year growth, thanks to the new services signed at the back end of last year. The team has done a fantastic job in working with our long-term partners in what is a challenging time for their businesses, while managing so far to keep the quarterly run rate stable in 2020. And turning to page seven, and I'm going to say a few words on what we're calling our network of the future, an integral part of how we intend to drive sustaining growth across our network's verticals throughout the next decade. Our vision is a seamless, multi-orbit, intelligent network that allows our customers to consume service flexibly and manage their application needs. It's a network that benefits from cloud scale and leverages network functions natively running in and seamlessly interconnected to the cloud. Our gateways and platforms will be virtualized and integrated with cloud data centers, and this vision took a major step forward through the announcement of SES becoming a founding partner for Azure Orbital. Just recently, we added ST Engineering iDirect and Gillette as key technology partners for O3B Empower, both of whom share our vision and together represent a significant percentage of the terminals deployed across our markets today. They will deliver their platforms to be fully compatible with the O3B Empower Space Brain Arc and the network automation functionality being built within ONAP. Just as importantly, the same hardware deployed at our gateways and customer locations will be able to transition seamlessly between O3B Empower and, for example, SES17. We're now less than a year away from the launch of SES17 and the first launch of O3BM Power, and we have 500 million of secured backlog for these systems, and we will report regularly on our commercial progress going forward. And finally, from me, before I hand over to Sandeep, an update on our four key initiatives on page eight. These four initiatives, when taken together, will transform SES. Our capabilities, our ability to serve our existing customers and attract new ones, and together will create substantial value for our shareholders. These initiatives reflect our core priorities at FES, and we have real momentum in all four. Since our last results call, we've made really strong progress in our C-band transition plan, as I mentioned earlier on in this call. We've completed all major procurements, a number of which are already ahead of schedule, and we've begun the process of transitioning customers. The FCC-led process is progressing at pace, And the strong demand for high-quality mid-band spectrum was evidenced recently by the extensive list of 74 potential bidders for the auction that will kick off already next month. So we're really well on track with relocation payments expected to begin in a few months, and with the first clearing milestone only 13 months away, unlocking the first billion dollars of proceeds that will be used to strengthen our balance sheet. Looking ahead to the second acceleration payment, it's still a little early to be definitive on the use of proceeds given that we're around three years away, but the order of priorities remains clear. Shareholder return, any further balance sheet strengthening if required, and disciplined investment should we see an opportunity to create shareholder value. Moving on to our second initiative, Simplify and Amplify, we've now implemented the actions needed to deliver on our targeted EBITDA optimization, that will deliver 40 million in EBITDA savings in 2021 and 50 million on an annualized basis from 2022 onwards. We're continuing to drive simplification, efficiency, and operational focus internally, and this is reflected in our decision not to pursue the separation of our networks business within SES at this time. We've done a lot of work on this, both internally and externally, and now have a blueprint to execute if needed. We've concluded that we can achieve the objectives of sharpened operational focus and strategic flexibility without incurring the additional cost, resource, and time to execute that separation would imply. We do intend to simplify our legal and financial structures, reducing the number of legal entities by more than a third, increasing visibility of business unit performance internally and later also externally, and continuing to drive strong operational focus in video and networks, while the work that we've done preserves strategic flexibility for the future. I've already spoken at some length about our third initiative, our network of the future, and the vision associated with that, and the important part that SES17 and O3BM power play in this architecture. This seamless interconnected multi-orbit vision is something we've been working on for some time, and I couldn't be more excited about the progress we're making. An important point to make is that if we can work seamlessly across SES, GEO, and MEO assets, we can also ultimately work seamlessly across other space-based networks as well. We're building a platform that can form a backdrop for network sharing, driving both improved customer experience and capital efficiency in the industry. And finally, cloud. And cloud is also part of this interconnected network of the future because it drives scale and the ability to virtualize large parts of our network. But as you can see from the industry forecast, the adoption of cloud services is also accelerating across many industries, including those that we serve today, and represents a substantial value opportunity for us. I think we're meaningfully ahead of the industry in the way that we're approaching cloud and looking to leverage the cloud across our business. And this is underscored by our substantially expanded partnership with Microsoft. Operationally, we've moved our own key enterprise and operational systems to Azure. And we've created a corporate cloud initiative to define, develop, and launch seamless cloud content and connectivity solutions to our customers. Last month, really excitingly, we became an Azure Orbital partner and key connectivity partner of Azure Orbital, building and managing gateways for Microsoft that will be co-located with their Azure data centers, and we'll also place our O3B and Power gateways there. We're also Microsoft's MEO satellite partner to connect Azure modular data centers and benefit customers who will be able to take Azure to the network edge extracting value by applying a range of data processing, AI, and other tools. So with that, I'll hand over to Sandeep and then come back to conclude at the end. Sandeep.

Thanks, Steve. Good morning, everybody. Moving to page 10, I will now cover the main financial highlights which are fully in line with our expectations and demonstrate a solid and resilient performance despite the current environment. Adjusted EBITDA of €883 million was 2.3% lower than the prior year. However, adjusted EBITDA margins improved year-on-year to 62.6%. Revenues were lowered by 3% or €42 million compared to prior year. However, impacts were limited at adjusted EBITDA due to year-on-year OPEX reduction by 3.7% or €21 million. Our quarter three EBITDA stood at slightly above 300 million euros, reflecting both resilient revenues and one of our lowest capex during past many quarters. This shows a good outcome of our commitment for strong COVID-19 cost mitigation actions and cost controls to protect the bottom line. Restructuring charges and C-band expenses during the first nine months of the year were 49 million euros in total. Depreciation and amortization was lowered by 20 billion euros, or 3.7%, due to the combination of satellites which are reaching the end of life, the extension of certain satellites' depreciable life, and the new assets that entered service during 2019. We are continuing to make good progress on reducing the recurring interest expense, thanks to the recent senior debt refinancings at rates much lower than the debt having been retired. Net interest costs decreased by 10% to 120 million compared to last year. However, the net financing cost of 135 million euros shows an increase due to lower interest capitalized and mostly non-cash forex losses. The change in net profit to 154 million euros was mainly due to the result of additional C-band and restructuring expenses, which stood at 49 million euros. movements in the forex and tax impacts from gains in 2019 to the tax losses in 2020, and lower non-controlling interest. Looking at the revenues on page 11, the developments reflected the continued strong growth in networks offset by near-term influences in the video. Video declined 8.1% year-on-year, impacted by DTH and cable customers right-sizing capacity in mature markets, by our ongoing withdrawal from low-margin activities, and also by the cancellations and postponements of sports and other events due to COVID-19. That said, Q3 revenue was unchanged compared with Q2. Our network business grew by 7.5% underlying basis year-on-year, which is third year in a row. This is thanks to a double-digit growth in mobility, which was around 18%, New government rents, which was around plus 1%, and return to growth and fixed data, which stood at around 6% positive. Now turning to the balance sheet on page 12. As mentioned by Steve, our leverage position continued to improve both year on year and quarter on quarter. Adjusted net debt to adjusted EBITDA stood at 3.2 times, which shows a reduction by 0.2x year on year basis. Our liquidity position, which comprises cash and the 1.2 billion credit facility, remains strong at near 2 billion euros. We have a strong base of senior debt with average cost of about 2.5%, average maturity profile of 8 years, and no significant senior debt maturities before April 2023 on a pro forma basis. The CapEx forecast on page 13 is unchanged with growth CapEx for SEA 17 and O3BM Power during 2021 and 2022. After 2022, the cash flow profile is expected to benefit from the revenues generated by these highly differentiated assets, as well as from the low needs for replacement CapEx. Finally, the full-year financial outlook as shown on page 14 is unchanged, As Steve mentioned, we are fully on track on both revenues with good visibility from having more than 97% of the revenues already contracted, as well as strong COVID mitigation measures to protect the bottom line. With that, I will conclude now and hand back to Steve.

Great. Thanks, Sandeep. So just a few closing words from me on page 15. Our solid year-to-date performance reflects FES's long-term fundamentals, strengths, and industry-leading position. Even with the headwinds of COVID-19, our network's business is delivering strong growth for a third consecutive year, with impressive new wins across government and fixed data in 2020, highlighting the value of our unique multi-orbit infrastructure. Our premium video neighborhoods are continuing to attract new premium TV channels and retain the best customers, with Canal Plus being the latest to extend their commitments with SES, adding to our substantial contract backlog. And we will remain committed to our financial discipline, which has enabled us to continue to strengthen the balance sheet, even in this challenging macro environment. We've been very thoughtful in terms of our growth capex and focused on investments like OTB Empower and SES17, which will meaningfully enhance our ability to serve customer demand and profitably grow the business. And lastly, with CBAND, we're fully on track to realize substantial incremental value, delivering significant shareholder value. And with that, we're happy to take questions.

Thank you. If you would like to... Go ahead, operator. Thank you. Apologies. If you'd like to ask a question, please press star 1 on your telephone keypad. Please ensure that your line is unmuted locally. You'll then be advised when to go ahead with your question. The first question comes from the line of Sammy Kasab calling from Exxon. Please go ahead.

Thank you very much, and good morning, gentlemen. I have three questions, please. The first one is on video distribution. Can you comment on the pipeline and on the upcoming renewals there to help us understand to what extent the quarter-on-quarter revenue trends are indicative for the next few quarters, please? The second question is on Empower and its commercial momentum. You've disclosed the backlog. Thank you. Can you disclose the backlog as it stood a year ago so that we see if all the backlog came in the last few months or how the momentum has been? And lastly, you have no new assets entering commercial service until late next year. Assets recently launched are filling up nicely, as your results show. So can you comment on how you bridge 2020 and 2022? In other words, how you see networks next year, please, Steve. Thank you.

Thanks, Sammy. So I'll take the first couple and then hand maybe to JP to take the last. So on the pipeline of renewals, we don't have any significant renewals in the last quarter of the year. And, you know, the vast majority of our business on the video side is already secured. We've actually seen a bit of an uptick in sports and events in the fourth quarter, which is helpful. And as far as 2021, we'll obviously address that down the road. We do have some renewals coming up in 2021, but we'll kind of go into that as we move into 2021. As far as Empower and SES 17, I mean, we're now sort of providing visibility into the backlog, and we'll do that going forward. I don't think we're going to go back in time and provide information on that, but I think the main message, Sammy, is we're seeing momentum starting to build now as the launch sort of comes into view, and that's fairly typical. And there's a good reason, therefore, for us to kind of report on this now and then to give you visibility of this going forward. And then maybe for the last question, I'll hand across to JP in the U.S.

Yeah, thanks, Stephen. Hi, Sammy. Yeah, from a demand perspective, we're seeing positive progression through into next year, obviously working through the COVID assumptions that we have to date and the visibility we have of those to date. I think your question was more around supply. Yes, we're making good progress on some of the high-throughput satellite assets, but actually we still have room to grow in certainly SES 14, SES 12, SES 16, or GovSat 1. and, of course, the other assets that we have around the globe. So I don't see our supply being challenged until we wait for SEF 17 to be in power. Of course, we still have some capabilities in MEO current generation to register that as well. So I think supply and demand will match into next year.

So may I conclude on that, that you see the quarter-on-quarter stability in video as indicative and expect networks to continue to grow positively next year?

Sammy, we're not going to get into guidance for next year until February, so appreciate the question, but we'll come back and talk to you about 2021 in February. I had to try, Steve. Thank you. Bye. Understood.

The next question comes from the line of Nick Dempsey calling from Barclays. Please go ahead. Yeah, good morning, guys. Can you hear me?

Very clearly, Nick.

Very good. So yeah, three questions from me. The first one, just going back to that $500 million of backlog, is a large part of that the deal with Thales on SES 17 that was kind of wrapped into the commissioning of that satellite? Can you give us some sense of how much of it relates to that? And then just some kind of idea about the average contract length behind that $500 million of backlog so we can just cross-check it with our modeling. Second question, In mobility, you continue to grow well. That's pleasing. As the benefit of the new business in aero and crew starts to wash out, and obviously it's harder to get new stuff, do we see a risk of some quarters of year-on-year decline in that business over the next few quarters? And third question, can we just get the latest thinking on the tax rate likely to be applied to the C-band proceeds, again, to help our modeling of that?

Very good, Nick. Thanks for that. Yeah, so look on the backlog. So yes, absolutely, the sort of the Thales avionics deal is part of that 500 million number, but it's certainly not the only one. And I think the purpose of establishing this backlog now and providing you guys visibility of that is that you can now track this as we go forward and talk about it. It is long-term in nature, and it ramps, as you would expect, right? So this is, and I would say that's sort of true of that backlog, that it kind of ramps as customers build in. But some of that backlog sort of starts immediately on day one. And so we're not going to break it out in further detail at this point in time, but we'll certainly give more visibility on that backlog as it grows and as we sort of approach not only the launch of the satellites, but the launch of the services. I think the second question probably is for you, JP, and then the third one for Sandeep.

Sure. Yeah. Thanks, Nick. And on mobility, yeah, obviously we've seen some good growth over previous quarters, which has seen us through into this year. But as you indicate, some new business has obviously been challenged this year, given the sort of COVID-19 situation. But we're confident the business we've won will see us strongly through into following quarters. Obviously, new business has been constrained, but we're watching very carefully the return to service, if I call it that, on both aviation and cruise. Obviously, on cruise, we're pleased by the lift of the no-sail order from the CDC in the U.S., and we're working with our customers very closely to see what that means, their actual return to service, which we expect to be relatively cautious and measured, as you would expect with all the new safety measures coming in. but we do expect to see some of those vessels starting to come through and then back to growth, and then the new vessels that have been on hold also coming through. So, yeah, we have to be measured in our new business expectations, but certainly with the indications we're seeing for some of those sectors, we should start to see some of that flowing through into next year.

Hi, Nick. Regarding your question on the tax rates on C-band proceeds, on C-band itself, as Steve said earlier, we are making Very good progress. Also, clearinghouse has been appointed on 22nd of October. We are in discussion with all the tax authorities because it's a multi-jurisdiction. We have given a tax guidance of between 20% to 25%. And at this moment, we are clearly effect to deliver towards lower end of that guidance.

That's very clear. Thanks a lot, guys. Thanks, Nick.

The next question comes from the line of Alexander Peter, calling from Associate General. Please go ahead.

Yes, thank you. Thank you for the questions. I have a few. The first one is if you could give us an update on your cost reduction on the third quarter alone and how much of that you expect to be able to sustain going forward once the effects of the pandemic subside. Secondly, if you could say on video services, how much legacy revenue is there left that has been a few years, and I've been talking about legacy dragging the segment down, when will it wash out completely? And then the last one, if you could give us the puts and takes behind the thinking on the future of the separation of your networks, what made the board change its mind at this point? Thanks.

So regarding the cost reduction, so clearly for 2020, we had announced a one-off COVID mitigation measures of 40 to 60 million euros. At this moment, we are expecting the gains to be about 50 million euros, as is stated in our earning lease. And we are tracking it very well. As you can see from our quarter three results, we have made very, very good progress on that front. And we will continue to see the gains of that. materialized during 2020 itself. As we said, these are one-off COVID mitigation measures. And on top, we continue to see the SNE gains, which will start ramping up from next year. They are about 40 to 50 million euros, to be precise, 40 million euros for 2021 and 50 million euros that we expect during 2022. And again, we will give more clarification with our full year guidance in February as to what impact from the cost we can expect during next couple of years, next year.

Great, thanks Sandy. On the second question on a sort of a low margin service. So sort of our exit from low margin services was the main driver of the overall service year to date reduction. But obviously what goes with the revenue reduction is also a reduction in cost and in particular cost of sales. And that showed a positive impact overall on the EBITDA level. We'd expect this to be largely done by the middle of 2021. And as you'd expect, we're always going to be focused on making sure that we're maximizing profitability and sort of long-term value in the services that we're delivering. And then on the third question, it wasn't so much a change of position. What we announced in March was that we were going to look at this, right? And when we announced in, I think it was March, February, that we'd review this as part of our overall transformation plan, we had three main objectives in doing it, which was strategic flexibility, it was sharpened operational focus, and also increased visibility, both internally and externally. And with the work that we've done, our conclusion is we can achieve all of those things without actually incurring the costs that going into full separation would require and would imply. And like I said in kind of the talk, we're going to simplify our legal structures. We're going to get rid of about a third of the legal entities that we currently have in the business, and that's going to sort of streamline things and save us fairly significantly from a cost standpoint. And so, yeah, I mean, the short answer is we can achieve all of the benefits that we envisaged, in particular maintaining and increasing actually our strategic flexibility without actually incurring the costs that separation would imply.

Very clear. Thank you.

The next question comes from the line of Michael Bishop calling from Goldman Sachs. Please go ahead.

Thanks very much. I've got one question, which is a bit of a follow up from the last one. And then the second question just on costs. The first one, just coming back to a couple of the points you mentioned. So it sounds like the network separation, you decided that there wasn't essentially the financial synergies. But could I confirm whether you did explore any sort of external value creation type opportunities alongside the analysis on just the financial synergies? And rolling into the second part of the question, which is you mentioned that capital efficiency in the industry could improve and SES was trying to lead that. That would, I guess, make people think about consolidation. But are you trying to say that capital efficiency in the industry can improve without consolidation and things like partnerships. Just trying to understand that comment better. And my third question on the costs is, as we think about the 50 million of one-time measures dropping away in 21, are they fully replaced by the 40 to 6 million simplify and amplify? Or is there some overlap? Because it seems quite hard to disaggregate at the moment what's what's going to be temporary and what's going to be permanent.

Yeah, thanks very much. Look, I'll take the first two and then let Sandeep take the third one. So look, again, on the separation question, you know, the objectives that we kind of laid out in February were relatively clear. This wasn't sort of driven by a particular M&A opportunity, if that was the question. It was really driven by the idea of how do we, you know, maintain strong operational focus, provide greater visibility into two businesses that, you know, look and feel quite different, but also give us strategic flexibility. And having gone through this, and we needed to kind of disclose it because it was material, right? And we were going to do a substantial amount of work externally as well. But having worked through this, you know, we see that we really, you know, we can sort of get the best of both worlds, right? We can get all of those things without incurring the cost that it would imply. And I think it's also true to say that The world looks a little bit different than it did back in February. From a very positive standpoint, we've made really substantial progress with CBAN and so have strong visibility towards the $4 billion in proceeds that will come as a result of us executing well on the accelerated transformation plan. But also we've been, you know, the world has been dealing with this sort of global pandemic over the last sort of, seven or eight months, which really drives focus on operational efficiencies. And so, yeah, this is the right decision for us to take for now, given that we can retain all of those benefits without necessarily incurring the incremental costs. Yeah, the second question was sort of around this idea of, you know, building a platform that gives us the potential to interoperate not just across our own satellites and our own systems, but also potentially others. And I think that that is very meaningful. I think it's meaningful in terms of providing better solutions for our customers. Customers in the market today can get confused by the number of different offerings that are out there. And if we can aggregate those offerings into a more coherent network, I think that's a good thing. I think it will improve the efficiencies of networks. But ultimately, it may mean that We don't, you know, the industry doesn't end up building kind of overlapping networks. And this was seen in mobile not so long ago, right, network sharing. And I think we can be a platform to enable network sharing. And sort of our ideas there are still relatively early in development. But I would say if we've created that capability to be multi-orbit and interoperable within our own system, then we can clearly do that outside our system as well. And I think that that is compelling for the future. And certainly leave you with the third question.

Yeah. So, Michael, regarding cost, both of these cost initiatives simplify and amplify 40 to 50 million gains ramping up from next year. and the COVID-19 mitigation, which is a one-off in 2020 action. These are very similar so far as amount is concerned, but the focus is very, very different. While simplify and amplify gains of 40 million euros for next year, they are sustainable gains and they will continue to recur year over year and rather continue to ramp up in 2022 to 50 million euros. COVID-19 mitigation measures are very exceptional and more kind of one-off, right, because this comprises of low amount of travels, no events, also many staff actions, the cuts, et cetera, that we did exceptionally during this year. And they are not expected to recur. And again, we are not giving a guidance for next year. Again, we are carefully looking at our numbers for next year. And we'll come back in February and give our guidance for next year as to what all it means for next year guidance in terms of cost actions.

Great, thanks very much.

Before we move to the next question, please be reminded, if you'd like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Giles Thorne, calling from Jefferies. Please go ahead.

Thank you. Just coming back to the question of networks, Steve, it would be useful to hear very precisely exactly what the strategic flexibility you're referring to, the flexibility that you thought you didn't have, but then realizing after doing the review that you can get it without having to do any kind of work around separating networks. So, again, what exactly is that strategic flexibility that you're aiming for? Second thing, I remember in times gone by, a previous CFO describing the capex on SES-17 is completely covered by the revenue you'll be generating from TALES. Assuming a satellite costs about $300 million, give or take, that's about $200 million of your $0.5 billion backlog that's coming from non-SES-17 stuff, so M-Power and So it'd be useful to know if you agree with those numbers and that 200 backlog. Is that existing O3B customers doing existing things, or is this exciting new things coming in that you've never done before on the back of Empower? And then my third question is, if we consider yourself and Intosat as the old guard in fixed satellite services mobility, there's been a massive departure by Intelsat in aviation with the acquisition of GoGo's commercial aviation business. Now, I know you vertically integrated with O3B in mobility for cruise, but basically in aviation, that's a big departure from the status quo. I could ask all sorts of leading questions, but basically I just want to know what you think about that. That's it. Thank you very much.

Thanks, Giles. So, yeah, look, I mean, I don't think I have to sort of spell out too much on strategic flexibility. I think, you know, what we've said in the past is we believe that consolidation in the industry would be a good thing and would benefit the industry and that as SES, as one of the leaders, we, you know, intend to remain open and sort of put ourselves in a position to lead that consolidation to the extent that we believe that it's sort of value accretive for our shareholders. And we could do that in multiple different ways. And so strategic flexibility speaks to putting ourselves in a position for which that's true. But as always, we're going to be financially disciplined about what we do and pretty objective about how we would go about doing it. So I think that probably is all I would say on the first question. And on the second question, and I appreciate, Giles, you digging. But, you know, look, we're providing guidance on visibility into how we see the market developing for SES17 low 3PM power. It is really exciting. I think despite, you know, what is... by all measures, a pretty depressed industry at the moment for growth on the veggie side in particular. We're seeing good traction on SES17 and OCBM Power and a lot of excitement around what we're creating and this sort of vision around the network of the future and the flexibility that that implies. you know, the sort of the direct connection to Azure and everything else that's implied with sort of the network of the future. And so, yeah, I think that 500 million in backlog reflects that and we'll continue to provide that information as we get sort of closer to that launch. And then, yeah, look, on the InfoSats move and GoGo, I think what it reflects more than anything else is, stress, frankly, in our sort of traditional customer base, which is the service providers. And when I say our, I mean the industry's sort of traditional customer base in the service providers. You know, we shouldn't lose sight of the fact that this is sort of an unprecedented global pandemic, and that has put the service providers under real stress. And I think that has led to, you know, not just the situation with GoGo's commercial aviation business, but also we see a number of our traditional suppliers service providers going through restructuring, Chapter 11, and so on and so forth. I think the industry will emerge sort of stronger for this. I think there was a little bit of irrationality in that sort of service chain, particularly, I would say, in aviation over the sort of the years preceding. And so I'm confident that that chain will emerge more strongly. As you know, we're an important provider to four of the six aeronautical service providers today. the other two being vertically integrated in Inmarsat and Viasat. And so we don't see any medium-term impacts on our business with GoGo or medium-term impacts on us as a result of Intelsat's acquisitions of GoGo. And we will obviously continue to support them as well as the other three that we serve today. And then for questions about Intelsat's strategy and why they did it, obviously you'll need to speak to them. And with that, did we get through your questions, Charles, or was there another one?

You did a very brief follow-up on the last point. Do you recognize the $100 million of capacity onboarding synergies that Intelsat has spoken to through the acquisition of GoGo? You know, do you see third-party capacity out there that they can transfer to Intelsat? Or do you think that number's not real? Basically, what's your risk of losing business?

Yeah, and, Charles, I honestly have no idea. I mean... You'll need to speak to GoGo or to Intelsat ultimately when the transaction closes. But what I can tell you is, you know, our business with GoGo is very long-term in nature. And, you know, it comes as a result of us having a really important asset in SES15, which has become sort of the prime location for internet services to planes in North America. We designed that satellite specifically for those services. And I don't see too much out there today in KU band that sort of is equivalent to SES 15. So I think we feel very, very good about the business we have with GoGo. It's very long-term in nature. And, yeah, for questions about the investment thesis that Intelsat had, you'll have to speak to someone else. Thank you.

The next question comes from the line of Patrick Wellington, calling from Morgan Stanley. Please go ahead.

Yeah, good morning, everybody. Steve, did I spot a change in the order of your use of the CBAN proceeds, which I think was shareholder returns, balance sheet, and then acquisition? I seem to remember balance sheet coming before returns before. So that's the first question. Second one on disciplined acquisition and let's stop beating around the bush. I mean, what people want to know is whether buying Utilsat, another video heavy player in Europe, different technology structure sits within your definition of a potential disciplined acquisition or whether all this chat about consolidation in the industry is more about maybe networks than it is about video. And then thirdly, I constantly struggle to find where to put my revenue for Cloud and Microsoft Azure into my model. Are we double counting here? Is what we're going to get from Cloud and Microsoft Azure something that should sit alongside the O3B Empower revenue line, or is it broader than that? Thank you.

Hi. regarding the first question on the uses of proceeds. So we have been very, very clear and consistent from the last time. The C-band, there are two tranches. The first tranche, which is one billion, the success milestone is in quarter four, 2021, which in one year's time. And this will be utilized fully for deleveraging. And the second proceeds, which is in about three years' time, We have been very clear about it that the first and foremost priority will be the shareholder returns. Then using part of the proceeds in case any balance sheet strengthening is required at that moment and in case we see any particular options which are very value attractive and enhancing shareholder value, we would remain open to those with a very, very strict financial discipline mindset. The priorities are very clear. Shareholder returns, balance sheet strengthening if required, and ready for optionality if we see the value in a disciplined way.

Yeah, Patrick, look, I'm going to probably disappoint you, but what I'm going to tell you is we're not going to comment or get drawn into a conversation about any specific other companies. I think as a general statement, as I said earlier on, I do believe that there's long-term logic in industry consolidation. We're going to continue to be financially disciplined in the way we think about it, and we're going to be as flexible as we can be in making sure that we put ourselves in a position to execute to the extent that we think that there is something value accretive out there. And then for the third question, JB, I suggest you take it.

Yeah, sure, Patrick. So obviously, cloud revenues, I think, are new to the industry, and I think we're pioneering that, as Steve said, so I appreciate the question. So the way we think about our revenues that we're seeing today coming from cloud, we typically hold those into our fixed data numbers. And those would be comprised of the revenues that we're drawing through our direct relationships with those cloud service providers. So direct into the cloud operators is where the initial revenues will be coming from. Going forward though, we expect more revenues through that channel, but what we will really drive is greater growth in the existing segments. cloud is very important to mobility customers, very important to telcos, et cetera. So it will drive kind of pull through revenues into those segments. And in terms of where you should be pegging it onto the assets, yes, Mio is absolutely something that provides high performance connectivity. So could be biased towards that, but certainly not just, and it will be across all of our Mio and geo assets based on these sort of end user and application needs of cloud. So, new to us all, I think, but that's kind of how we're thinking about placing the revenues.

That's great. I mean, just in that context, Steve, I mean, do you envisage at some point having some sort of presentation to outline the potential of O3B Empower and these cloud opportunities, or do we just roll it into our general sort of growth model for the individual divisions?

I think we'll certainly think about that, Patrick. I think one of the things that is certainly true is as we get closer to the launch of both SES17 and OTPM Power, we want to give you more and more kind of visibility as to why we think these assets and the capabilities that we're building are compelling, and also, frankly, why our customers do, right, and give you kind of more visibility of that and examples of of what our customers are going to use these assets for and use the network for. How do we, you know, one of the things we're hearing back from our customers most strongly is the need for sort of flexibility. And I think that probably comes from this COVID environment where, you know, anyone who's taken on a lot of fixed, you know, fixed commitments and fixed networks, you know, was less able to respond. And that's really at the heart of everything that we're building with with SES17, OTB Empower, with the architectures that we're building, with the partners that we're announcing with our Microsoft, the work that we're doing with Azure and sort of the cloud at its very heart is flexibility, right? So I think what we're building is very, very responsive to what we're seeing coming out of this sort of pandemic period. But I think the short answer, Patrick, is yes, we'll figure out how we continue to provide more and more examples, visibility, and so on and so forth as we get towards the launch of 17 Empower.

Great. Thank you.

That concludes the question and answer session for the course. I'd like to hand the call back over to your host for any closing remarks. Thank you.

Yeah, just to say thank you very much all for joining. Really appreciate it, particularly with all the excitement that's going on over in the U.S. right now. Really appreciate your attention and look forward to speaking to you again when we announce our end-of-year Q4 results. Thanks very much all. Appreciate it.

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