Investor Day 2012

Romain Bausch, President & CEO

22nd May 2012

Disclaimer / Safe Harbor Statement

c This presentation does not, in any jurisdiction, including without limitation in the U.S., constitute or form part of, and should
not be construed as, any offer for sale of, or solicitation of any offer to buy, or any investment advice in connection with, any
securities of SES, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or
commitment whatsoever.
c No representation or warranty, express or implied, is or will be made by SES, its directors, officers or advisors, or any other
person, as to the accuracy, completeness or fairness of the information or opinions contained in this presentation, and any
reliance you place on them will be at your sole risk. Without prejudice to the foregoing, none of SES, or its directors,
officers or advisors accept any liability whatsoever for any loss however arising, directly or indirectly, from use of this
presentation or its contents or otherwise arising in connection therewith.
c This presentation includes forward-looking statements. All statements other than statements of historical fact included in
this presentation, including without limitation those regarding SES financial position, business strategy, plans and
objectives of management for future operations (including development plans and objectives relating to SES products and
services), are forward-looking statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual results, performance or achievements of SES to be
materially different from future results, performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions regarding SES and its subsidiaries and
affiliates, present and future business strategies, and the environment in which SES will operate in the future, and such
assumptions may or may not prove to be correct. These forward-looking statements speak only as at the date of this
presentation. Forward-looking statements contained in this presentation regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the future. SES, and its directors, officers and
advisors do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

SES proprietary information

Agenda

SES Overview

Spectrum Overview
Industry Landscape

SES Growth Outlook

SES proprietary information

SES Overview

SES Overview

A clear vision and strategy

c

Our Vision : To bring people closer together through the power of satellites

Our Mission : To provide our customers with the most reliable, innovative and highest quality satellitebased solutions to entertain, inform and connect people around the world

5-Pillar Strategy:
Develop Spectrum
Innovate
Invest
Enhance Sales Force
Improve Organisational
Efficiency

SES proprietary information

SES Overview

A balanced service portfolio

c Media & Broadcasters
SES helps broadcasters deliver 6,200 TV and radio channels of which more than 1,200 TV channels in High Definition
to over 258 million homes worldwide.
SES provides direct-to-home broadcasting, feeds for cable networks, IPTV operators and digital terrestrial TV networks.
In addition, SES provides professional services such as play-out, encryption, platform services, contribution and
OU/SNG.

c Enterprise & Telcos

SES global satellite fleet and ground infrastructure, combined with our partner teleports around the world, ensures that
our customers enjoy connectivity of the highest quality anywhere in the world.
SES provides VSAT networks, broadband Internet access, mobile backhaul and many more services for corporate and
Telco customers worldwide.

c Governments & Institutions

SES serves the diverse needs of governments and public sector organisations around the globe.
SES offers secure and reliable communication links for governments and international institutions. SES delivers vital
communication links for civil and military agencies, first responders, and for educational or medical purposes worldwide.

SES provides the most efficient, reliable and secure satellite communications
solutions to broadcast, telecom, corporate and government customers worldwide
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SES proprietary information

SES Overview

SES revenue & capacity profile: diversified & balanced

2011 Revenue

2011 Revenue

20%

22%
Infrastructure

Europe

Services

54%
24%

International
North America

80%

SES serves customers around the world

The company manages an expanding and regionally well-balanced portfolio
Our solid position in the developed markets of Europe and North America lend stability to SES revenues
However, a growing share of revenues originates in Latin America, Asia-Pacific, the Middle East and Africa.

Balance between developed & emerging markets

C- & Ku-Band transponder capacity: Developed and Emerging markets
(Supply by operator 2011-2015)

Emerging 2015

68% 70%

65% 69%
55%

54%

54%

45% 46%
35% 31%

92% 94%

50%

46%

Emerging 2011

50%

Developed 2015

32% 30%
8% 6%

SES

Intelsat

Eutelsat

Telesat

Others

By 2015 55% of SES capacity will serve

the fast-growing emerging markets.
45% will serve developed markets

Developed 2011
Source: SES analysis

Others

SES proprietary information

SES Overview

German analogue switch-off

c Analogue satellite broadcasting in the German market ceased on 30 April 2012
c Analogue accounted for 32 transponders at 31 December 2011, from a peak of 43 in 2008
c Of the 32 transponders:
13 have already been recontracted
10 have revenue start dates in 2012

c Of the peak of 43 transponders in 2008, over half (24) have thus already been recontracted
c Net revenue impact in 2012 is expected to be approximately EUR 73 million
c Full commercialisation of the capacity is foreseen in 2016
Driven by solid demand in core markets, especially from HD TV growth

c Permanent revenue impact is expected to be approximately EUR 40 million (as of 2016)

SES proprietary information

SES Overview

German analogue impact in 2012

c 2012 results will include the exceptional impact of the
analogue TV switch-off in Germany
Target date is 30 April

c Noticeably affecting reported revenue growth in 2012

Analogue revenue was EUR 150 million in 2011, reducing to
EUR 42 million in 2012

SES Group Revenue

in EUR millions at constant FX @ USD 1.40
1,800

42
150

Analogue
Revenues
1,300

All Other
Revenues

1,585
800

c Recontracted capacity will contribute some EUR 35

million revenue in 2012
300

The net impact being in the guidance range of EUR 60-80 m

(200)

2011
Actual

2012
Outlook

*) versus FY 2011 result publication on 17 February 2012

SES proprietary information

SES Overview

Outlook to 2014
SES Group Revenue

c Underlying growth is strong

in EUR millions at constant FX

@ 1.40 USD

From emerging markets and European

operations

150

c Ex- the analogue impact, revenue CAGR

2012-2014 of approximately 7.5%
1,735

c As reported, revenue CAGR 2012-14 is

expected to be approximately 4.5%

1,585
1,585

2011
Actual

2011
Analogue
Revenues

2011
Excluding
Analogue

2012

2013

2014
Outlook

*) versus FY 2011 result publication on 17 February 2012

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SES proprietary information

Industry Landscape

Industry Landscape

Operator market shares by revenue: 2010-11

2010 Operators Revenue Share

2011 Operators Revenue Share

SES
21.8%

SES
21.7%
Others
32.6%

Others
32.9%

Intelsat
23.9%

Telesat
7.5%
Eutelsat
13.9%

Total Industry Revenue $10.6B

Intelsat
23.2%

Telesat
7.3%
Eutelsat
15.0%

Total Industry Revenue $11.1B

Source: SES analysis

SES maintains revenue share as FSS industry grows

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SES proprietary information

Industry Landscape

Market shares by capacity: 2011 and outlook 2015

2011

2015

TOTAL: 7,399 transponders

TOTAL: 9,718 transponders

Others
2,895
39%

Telesat
291
4%

Intelsat
2,181
22%

Intelsat
2,061
28%
Others
4,618
48%

Eutelsat
831
11%

SES
1,321
18%

SES
1,570
16%
Telesat
315
3%

Eutelsat
1,034
11%

C- & Ku-band
Supply
TOTAL

7.1%

Intelsat

1.4%

SES

4.4%

Eutelsat

5.6%

Telesat

2.0%

Others

12.4%
Source: SES analysis

The Big 4 are seeing their total market share declining by 9 percentage points

SES is growing its supply second fastest (4.4%) among its peers, but still trails pace of Emerging Operators (>12%)

Emerging operators will increase their collective share of supply by nearly 10 percentage points

SES to maintain share of the fast-growing global FSS capacity over next 5 years
SES proprietary information

CAGR
(11-15)

13

Industry Landscape

Opportunities & challenges

Opportunities

Challenges

TV viewing increases worldwide, explosive growth in Pay-TV

DTH leads Pay-TV sector in emerging markets
DTH has become the leading TV distribution platform in Europe

Generous export financing from China, France and US has contributed

to a mushrooming of National satellite programmes

Source: Screen Digest

Global Pay TV revenues:

Region

Number of
national
initiatives

Programmes in implementation
phase

HD has now developed global momentum increasing bandwidth

requirements as it becomes the new standard

Latin America

Bolivia, Brazil, Mexico, Argentina

Asia

Bangladesh, Laos

Ultra HD (4K) now beginning, likely to materialise in a couple of years

MENA

Oman, Morocco, Algeria

CEE

Belarus, Ukraine, Azerbaijan,

Turkmenistan

Strong government demand from national broadband programmes for

rural connectivity, universal mobile coverage obligations etc.
Satellite remains the best combination of cost-efficiency and technical
quality a future-proof way of broadcasting content

Increased competition from terrestrial substitutes

Scarce and limited access to spectrum

Mobile & Fixed Telcos are increasingly turning to satellite as they face
huge consumer demand for video content: both as an add-on to
complete their triple-play bundle as well as embedding satellite in
Hybrid Solutions.
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SES proprietary information

Industry Landscape

Expansion of DTH & HD broadcasting

c SES continues to deliver growth:
SES broadcasts 44 DTH packages, more than any other satellite operator
Telcos also grow with SES Hybrid TV (DSL Internet and DTH TV) - has been an immediate success:
-

EntertainSat in Germany attracted more than 190,000 subscribers only 6 months after launch on SES

HD attracts people worldwide SES set to benefit: HD+ in Germany & YahLive as a new HD slot in the Middle East

c DTH projected to grow across the world with the uptake in emerging markets and growth in HD being the
main drivers of demand

Digital DTH subscribers (in 000s)

300

2011 2020:
Total channels increase: 45%
HD channels will increase by 255%
2020
2011

DTH Pay-TV subscribers

DTH Pay TV
Revenues

250
200
150

Emerging
markets

Emerging Markets

2015
(bn EUR)

CAGR
(2011-15)

25

13.7%

11%

100

HD
Developed
markets

50

Developed Markets
0
2010

26%

SD

2011

2012

2013

2014

45

3.2%

> 30,000 channels

2015

Source: Dataxis

74%

89%

Source: Screen Digest

> 45,000 channels

Source: Euroconsult

DTH growth driven by HD in developed markets, increasing disposable incomes

and digital switch-over in emerging markets
SES proprietary information

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Industry Landscape

Impact of HD & Ultra HD on bandwidth:

Image Quality

SD

MPEG-2:
MPEG-4:
HEVC*:

ca. 4 Mbit/s
ca. 2 Mbit/s
ca. 1 Mbit/s

HD

MPEG-2:
MPEG-4:
HEVC:

ca. 19 Mbit/s
ca. 10 Mbit/s
ca. 5 Mbit/s

UHD

MPEG-2:
MPEG-4:
HEVC:

ca. 80 Mbit/s
ca. 40 Mbit/s
ca. 20 Mbit/s

There is a continued demand for HD

The interest in Ultra HD (4K) is mounting

Resulting in increased bandwidth demand

* HEVC: High Efficiency Video Coding

Ultra HD is not a distant fantasy, here are some of the drivers:

- CE Manufacturers: 4K screens are already available for sale and although expensive the history is in its favour:
The average price for an HD television in Europe fell from EUR 4,000 to below EUR 1,000 in 3 years
The average TV replacement cycle is 7.5 years, down 10% from just three years ago
4K HD looks set to be the enabler of high quality autostereoscopic (glasses-free) 3D
- DTH Operators: Focus on premium quality: 4K HD will enable further differentiation
- Content providers:
Digital Cinema, spreading fast around the globe, already using 2K & 4K
An increasing amount of movies are shot in 4K

The first adopters among broadcasters are predicted to start with Ultra HD (4K)
via satellite around 2015, to become widespread around 2020
SES proprietary information

16

Industry Landscape

SES a leader in worldwide DTH delivery

SES broadcasts 28% of all channels transmitted in HD worldwide - and 17% of all satellite TV channels
Europe

Russia

SES
31%

North America

SES
17%

Others,
69%

SES
0.3%

Others
99.7%

MENA
SES 1%

Asia
Others
83%

SES
10%

Others
99%

Latin America

SES
12%

Sub-Saharan Africa

Others
90%

SES
25%
Others
75%

Others
88%

..1/4 of the worlds DTH Pay-TV subscribers rely on SES

25%
Others
75%
Source: Lyngsat YE2011, Dataxis Q4 2011, Marketresearch.com

SES proprietary information

17

Industry Landscape

OTT, multiscreen & non-linear viewing: Context

An anything, anytime, anyplace
multiscreen environment is evolving

Driven by double-digit growth in

OTT and non-linear viewing

Complementing the linear TV

experience

A competitive value chain of

players is emerging

Future unified, cloud- & satellitebased multiscreen services will

require hybrid solutions
SES proprietary information

Source : Booz & Company

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Industry Landscape

OTT, multiscreen & non-linear viewing: Sustainability

Except for some urban fiber
network operators, a 100% OTT
consumption model is
unsustainable

which calls for hybrid solutions :

satellite makes connected TV
sustainable and addresses the
reach issue

Every investment must be profitable in the endthe only solution is hybrid, as in our box that is
combined with television reception via satellite, and can avoid such bottlenecks easily while providing the
highest quality.
Friedrich Joussen, CEO of Vodafone Germany - March 2012

Having a satellite proposition linked with IP in this hybrid solution is like having the best of both worlds
Gerry OSullivan, Deutsche Telekoms Vice President of Global TV and Entertainment March 2012

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SES proprietary information

Industry Landscape

OTT, multiscreen & non-linear viewing: Hybridisation

c TV viewing and the overall TV market has not been measurably impacted by OTT and non-linear
consumption: both are seen as complementary to the linear, lean-back experience
c Hybrid Terrestrial-Satellite combines broadcasts quality, reach and economics with the interactivity of nonlinear and OTT

Strategy

Telecom / Mobile Network

Operators

Existing Pay-TV
Platforms

FTA broadcasters

OTT Providers

Promote hybrid to win Telco/MNO

customers
Protect SES reach and
neighbourhoods

Improve Pay-TV
competitiveness via
Outsourcing and
Simulcryption

Increase reach and stickiness with

Sat>IP
Selectively use HD+ to monetise FTA
reach

Promote hybrid to protect

SES reach and
neighbourhood

SES is supporting ecosystem

development via solid industry
partnerships to enable hybridisation
and deliver a Smarter TV
experience with no perceptible
difference in quality

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SES proprietary information

Industry Landscape

Hybrid the best of both worlds

Hybrid combines satellites broadcast quality, reach
and economics with terrestrial interactivity

Interactivity

SES is supporting Hybrid solutions that combine the best of satellite and terrestrial IP delivery to
enhance end-user experience and provide superior economics
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SES proprietary information

SES Growth Outlook

SES Growth Outlook

SES Fleet development to 2014

7
Satellites to be launched
between 2012 and 2014

19%
Total capacity increase by 2014
compared to year end 2011

SES Satellite fleet today

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SES proprietary information

SES Growth Outlook

Satellite investments
FURTHER
GROWTH
OPPORTUNITIES

COMMITTED PROGRAMMES

New satellite

ASTRA 2E

SUCCESSFULLY LAUNCHED!

ASTRA 2G
ASTRA 5B
SES-8

SES-6

2-4 further
growth
satellites

ASTRA 2F
SES-5

SES-3

QuetzSat-1
SES-4

ASTRA 1N
SES-2

Yahsat 1A

Q1
2011

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2012

Fleet configuration is based on current planning and is subject to change

SES proprietary information

Q1
2013

Q2

Q3

Q4

Q1

2015/2016/2017

2014
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SES Growth Outlook

Capacity to increase by 19% 2012-2014

SES GROUP
(36 MHz Equiv.
Transponders)

2012
Q1

Q2

2014

2013
Q3

Q4

Q1

ASTRA 2F
(+12)

Europe Fleet

Q2

Q3

ASTRA 2E
(+12)

ASTRA 5B
(+21)

Q4

20152017

Total

Q1
ASTRA 2G
(+10)

55

North America Fleet

International Fleet
Total New Capacity *)

Changes due to fleet movements

Total Incremental with
Fleet Movements

c
c
c

SES-4
(+27)

SES-5
(+64)

27

64

AMC-3
(+16)
SES-3
(+8)

12
NSS-7
(+22)

SES-6
(+49)

SES-8
(+21)

49

33

161
21

ASTRA 2B
(-12)

* Entry into commercial service is typically 6 to 8 weeks after the launch of the satellite

SES-4 has been launched on 15 Feb 2012 and brought into service in mid-April
7 satellites to be launched by end 2014, providing replacement and incremental capacity
In total 250 incremental transponders deliver over 19% additional capacity compared to the
1,315 transponders available at 31 December 2011

2-4 additional investment possibilities are to be developed

All infrastructure projects exceed IRR hurdle rate of 10-15%

10

2-4 Satellites
in
Asia & Latin
America

216
34

250

New Capacity
Replacement & New Capacity

SES investment programme has a strong focus on growing market segments and regions
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SES proprietary information

SES Growth Outlook

Replacement capex spending reducing,

continued investment in growth opportunities
EUR million
Estimated, uncommitted potential Growth Investments (maximum)
Estimated, uncommitted potential Growth Investments (minimum)
Estimated, uncommitted Replacement Satellite capex
Committed, non satellite capex Infrastructure and Services
Committed Satellite capex for Replacement and Incremental capacity

Total 2011-2017: EUR 3.5 to 4.0 billion

2011 to 2017: capex spending significantly reduces as replacement cycle of the SES fleet nears its floor
c EUR 500 million (2 satellites) to EUR 1 billion (4 satellites) foreseen for potential (not yet committed)
investment programmes with additional capex spending as of 2013
c 2-4 additional investment possibilities are to be developed:
-

1-2 for Asia

1-2 for Latin America

CapEx as proportion of revenue reduces from 41% in 2012 to appr. 11% to 23% between 2014 and 2017
Note: FX translation based on 1 EUR = 1.40 USD (A 2011 - T 2017)

SES proprietary information

26

SES Growth Outlook

O3b Networks
c SES cash investment to date of USD 190m, giving a 46% equity interest in O3b (after the
delivery of all in-kind services)
c SES has the possibility to take control of O3b:
By reaching 50.1% ownership through a ROFO (Right Of First Offer) agreement
Once SES has taken control of O3b, SES will either float/IPO O3b or acquire 100% ownership (in case
other shareholders decide to exit)
While SES is still a minority shareholder, there is no exercisable put option that would compel SES to
go above the 50% threshold

c Key milestones:
2013
Q1

Q2

2014
Q3

Q4

Launch of satellites 1-4

Launch of satellites 9-12

Launch of satellites 5-8

Service Commencement

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SES proprietary information

SES Growth Outlook

O3b Networks Financials

S

Revenue per satellite of around USD 40m after ramp-up period

Revenues

Substantial continued organic growth opportunities beyond the first 20 satellites (up to 120 satellites
technically possible)

EBITDA

EBITDA margins at the level of large FSS players

Tax Rate

Effective Tax Rate of around 15%

Low Capex per satellite, typically below USD 95m for the first 8 satellites, and up to one third lower than
this for the follow-on satellites (including construction, launch, insurance and ground equipment)

Replacement cycle of 10 years for O3b MEO satellites

Low cost of debt: senior debt expected to stay below 6%, thanks to COFACE backing

Greatly reduced operational risk due to SES strategic support and operating agreements

USD 1.5 3.0 billion

Based on USD 800m debt, 12 satellites, and 6-10x EBITDA multiple

Business Plan is based on 20 satellites

CAPEX

Cost of capital
Equity Value
Estimation

28

SES proprietary information

SES Growth Outlook

Free cash flow and use of cash

c

Working assumptions:
EBITDA 2013-2017 assumes CAGR of 4.5% (extrapolating the 2012-2014 CAGR guidance)
Cash conversion rate of ~90% (based on historic average)
Capex including committed satellites and uncommitted, replacement investments, but excluding potential growth
opportunities (2-4 satellites)
Continuation of dividend policy

FCF generation and financial headroom based on current fleet and launch schedule
(before incremental growth opportunities on 2-4 additional satellites and potential O3b investment)

Key financial EUR billion

2013-2017

EBITDA

~ 7.5

Net operating CF

~ 6.8

Capex

~ (1.5)

Dividend

~ (2.3)

Interest

~ (0.7)

Free Cash Flow

Financial Headroom
(at YE 2017 3.3 times)

~ 2.3
~ 3.5

Notes: 1 EUR = 1.40 USD; Interest rate of 6%; Net debt / EBITDA threshold of 3.3 times

SES proprietary information

Illustrative available liquidity can be used for:

Investment in 2-4 additional satellites

Equity increase in O3b

Other use (e.g. M&A, cash return to shareholders)

29

Summary and Conclusion

c Clear strategic vision
c Strong core video (DTH) business in established markets
c Well balanced investment programme directed towards higher growth markets
c Well positioned to meet growing market demand
c Limited exposure to consumer broadband
c Rising free cash flow even if additional investment opportunities are pursued
c Delivering sustainable value for shareholders

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SES proprietary information