SES S.A. (SGBAF) Q2 2023 Earnings Call Transcript

SES S.A. (OTCPK:SGBAF) Q2 2023 Earnings Convention Name August 3, 2023 3:30 AM ET

Firm Individuals

Richard Whiteing – Head, Investor Relations

Ruy Pinto – Chief Government Officer

Sandeep Jalan – Chief Monetary Officer

Convention Name Individuals

Nick Dempsey – Barclays

Roshan Ranjit – Deutsche Financial institution

Carl Murdock-Smith – Berenberg

Terence Tsui – Morgan Stanley

Operator

Hey, and welcome to the SES Half 12 months 2023 Outcomes Name. My identify is Laura, and I might be your coordinator for at this time’s occasion. Please observe this name is being recorded. [Operator Instructions] I’ll now hand you over to your host, Richard Whiteing, Head of Investor Relations, to start at this time’s convention. Thanks.

Richard Whiteing

Thanks, Laura. Good morning, everybody. Thanks for becoming a member of this analyst and investor name for our H1 2023 outcomes. This morning’s presentation was uploaded together with the press launch to the Buyers part at ses.com, should you don’t have already got it. As all the time, please observe the disclaimer in the back of the doc.

In a second, Ruy Pinto, CEO, will current the primary enterprise highlights, adopted by Sandeep Jalan, CFO, to cowl the financials in additional element. After some closing remarks from Murry, we might be pleased to take your questions.

So with that, let me hand over to Ruy.

Ruy Pinto

Thanks. Thanks, Richard. Good morning, good afternoon, everybody. First, I’m conscious that that is the primary outcomes name with me after our management transition at SES. I’ve to say I really feel privileged to guide the corporate at such an thrilling time in our trade, and I’m wanting ahead to the chance of participating with all of you in the midst of the following – of this name within the subsequent few quarters.

Why don’t we go and instantly begin with Web page 3 and the highlights of what I believe was a extremely sturdy begin of the 12 months for SES. I’m happy with the strong first half monetary efficiency of our networks enterprise. We’re delivering progress on the again of a double-digit prime 10 Mobility, and notably, on our cruise phase as effectively. In Q2, our income efficiency was absolutely constant with our expectations and we’re persevering with to signal necessary long-term renewals, which mirror the worth of our core neighborhoods.

Consequently, I’m happy to say we’re on observe to ship on our monetary outlook for the complete 12 months for the complete of 2023. Along with that, I’m happy to say that at this time we’re saying a share buyback program of as much as €150 million, which demonstrates our conviction in SES’ long-term fundamentals. And what I imagine is our present share worth valuation, representing a lovely alternative to deploy capital in the most effective curiosity of our shareholders.

Shifting on to O3b mPOWER. O3b mPOWER, I’m happy to say we have now now deployed all of the upgraded floor infrastructure and the variety of empower prepared buyer terminals that make the most effective use of the ability fleet capabilities, each in area and on the bottom. Because the identify states, the O3b mPOWER prepared terminals being with lots of our clients permit us to have starters industrial service beginning and I believe it’s very helpful to each us and to our clients. We even have the primary two mPOWER satellites of their last orbital positions with greater than 4 months of gathered operations in area already accomplished. And a follow-on two satellites S3 and S4 might be arriving on the last places within the MEO orbits by the tip of August.

The launch of Satellite tv for pc quantity 5 and quantity 6 out of the 11 that we have now presently being manufactured is presently deliberate with SpaceX for Q3 2023. While we watch for that launch, we proceed the testing of the mPOWER payloads in area. Let me add as effectively that in the midst of operations, these operations marketing campaign of the primary 4 satellites, we did observe various sporadic journey offs on a fraction of the quite a few POWER modules on board. These trip-ups have been recovered rapidly and with out the affect on the efficiency of the mPOWER payloads. We’ll proceed to research this phenomenon. And in parallel, we’re revising our operational procedures that take – in order that we are able to take these sporadic occasions under consideration. We’re being extraordinarily clear on what we’re doing as a result of as you understand, we would like mPOWER to work flawlessly for SES and for our clients. We nonetheless plan to launch O3b mPOWER companies by the tip of this 12 months.

On the industrial entrance, the mixed backlog for SES-17 and likewise the mPOWER is growing. It now stands at greater than $1 billion as new offers signed within the Mobility phase and in fastened information, have greater than changed the revenues consumed in H1 2023. That’s an excellent outcome for us. This backlog quantity nonetheless doesn’t but rely the dedication from the Luxembourg authorities, which moved good step nearer with the Luxembourg Paramus approval of our new world companies program. That’s valued at €195 million over a 10-year interval. New World Companies or NGS, as we name it internally to reap the benefits of O3b mPOWER’s skill to ship versatile, high-performance connectivity options, and supply resilient safe satcom capabilities for Luxembourg for its companions within the areas of protection, safety and catastrophe restoration.

Additionally in authorities, we’re very happy to say that the consortium of SES and a small variety of different European area and telecom gamers, the consortium named SPACERISE has been chosen to develop a proposal for subsequent June. I’m happy with the progress that we’re making on this necessary challenge for Europe. It’s nonetheless within the early phases, however it’s rewarding to see that we’ll be delivering the preliminary proposal for the European Fee on the seventh of August as a group. That is a lovely alternative to create for Europe, a space-based sovereign communications community and SES is a agency believer on this challenge alongside our different consortium members.

I’m wanting ahead to coming again to this matter in future calls. Lastly, I’m delighted to say that after greater than 3 years of exhausting work from many inside and out of doors SES, we have now cleared the 300 megahertz of CBD spectrum within the U.S. forward of schedule. We now have submitted our certification. We now have handed the 10-day interval for objections, and we are actually centered on working with the FCC to have approval of that certification because the final main milestone to receiving the Section 2 pretax incentive fee of $3 billion. We’re assured that we’ll get this fee in This fall, realizing an incredible quantity of worth for SES.

If I may transfer on to Web page 4 and we’ll speak slightly bit concerning the numbers. The income of €987 million was absolutely in step with expectations with a break up of 51% from networks and 49% for Video. Within the final 6 months, we have now signed a complete of €960 million price of contract renewals and new enterprise wins throughout the group. In Networks, this included 6 information offers with our companions, Marlink, SSi Mexico, Telecom Cook dinner Islands, new aviation income, together with an enlargement of our enterprise jet service with LuxStream, in addition to crews and industrial delivery wins. On the U.S. authorities phase, we had awards on packages similar to CSSC II with Inmarsat, the TROJAN Community, and the [indiscernible] program. I apologize for acronyms. That is complemented by a wholesome improve on our Video backlog of €350 million and notably, in the previous couple of days, we agreed a multi-transponder evaluate with our buyer at Telefonica on our 19.2 levels this neighborhood.

Telefonica is the operator of the Spanish Movistar Plus, Pay-TV platform. And this renewal provides greater than €90 million to our backlog simply this week once more. Consequently, our absolutely protected contract backlog, which doesn’t embrace the let authorities stood at €4.7 billion on the finish of June, underpinning the visibility, the longevity and the power of our future income streams and money circulate. We’re additionally mandating a robust grip on value and discretionary spend with our adjusted EBITDA for the primary half of 2023, standing at €530 million representing a margin of 54% as we step by step transfer from Video to Networks. As I discussed already, this implies we’re absolutely on observe to realize our income and adjusted EBITDA outlook for the complete 12 months of 2023.

If I may then transfer on to extra enterprise particulars. Let’s go on Web page 5. So on Web page 5, Second quarter income grew 3.4% year-on-year. And I’ve to say that, that has not been the case in the previous couple of years. We’re very happy with that outcome. And that seems to be that within the first half of 2023, we’re 3.1% larger as in contrast with first half of 2022. The important thing driver continues to be the sturdy efficiency in our Mobility phase, primarily pushed by additional enlargement of our cruise enterprise regardless of competitors. That’s a sturdy first half efficiency in authorities and stuck information, which included €7 million of periodic income in Q1 as effectively. Looking forward to the rest of this 12 months, the mixture of offers signed thus far and visibility into the pipeline of near-term offers will permit us to ship a arrange in income from H1 from the primary half to the second half of 2023, which is already absolutely implied in our full 12 months outlook.

Happening to Video now on Web page 6, please. You’ll be able to see that the outturn of H1 of the primary half of 2023 was equally monitoring effectively towards our funds and indicative of the secular traits we’d count on to see going ahead that you just’re accustomed to. A discount of two% year-on-year within the second quarter contributed to the general income within the first 6 months, closing at 3.5% decrease than the primary half of 2022, and that’s excluding €10 million of periodic income booked within the prior 12 months, in any other case to look slightly bit higher. Throughout the enterprise, the discount is principally coming from decrease volumes within the mature markets, however we’re delighted to say that pricing has been steady. And even in some circumstances, we have been capable of barely improve pricing with the good thing about having indexation clauses given the present inflation in roughly 20% of our Video contracts.

Whereas nonetheless a comparatively small a part of our total Video income, our sports activities and occasions companies continued to increase, rising and is establishing SES as a trusted accomplice for main sports activities manufacturers and marquee occasions, additional solidifying our place within the Video market. We’re very happy with that achievement in sports activities and occasions.

With that, I wish to hand over to our CFO, Sandeep, to provide extra particulars on the financials.

Sandeep Jalan

Thanks, Ruy, and good morning, good afternoon, everyone. Beginning with the monetary highlights on Web page 8, we’re happy with a strong first half efficiency, which is in step with our expectations, not solely when it comes to headline financials, each the income and EBITDA, but in addition good constructive traction and order consumption and likewise see a clearing having accomplished a lot forward of schedule.

Reported income was up 10% year-on-year to €987 million, this included the complete contribution from the acquisition of DRS GES, which we had accomplished in August final 12 months. On a like-to-like, income was 1.2% decrease versus H1 of final 12 months, the place discount in Video was not absolutely offset by the expansion in networks. Nevertheless, quarter 2 revenues confirmed a discount in progress of 0.7% year-on-year for complete and the Video decline was flattening to minus 2% for quarter 2 year-on-year foundation.

Adjusted EBITDA of €530 million for the primary half of this 12 months was 3% decrease on a reported foundation after which see on a like-to-like foundation it was 6% decrease when together with the impact, significantly on the DRS GES acquisition results. This represented a strong margin of 54%. Adjusted internet revenue was €116 million, and I’ll cowl this in a second on the following slide.

The monetary outlook for 2023 is absolutely reaffirmed with income, adjusted EBITDA and CapEx every being absolutely on observe versus the outlook we had given in February. We now have determined to launch a share buyback to run of as much as €150 million. The corporate will purchase as much as 20 million A-shares and 10 million B-shares in equal proportion below mandate given by shareholders at April AGM of final 12 months.

As Ruy talked about, this displays our confidence within the long-term fundamentals of SES, which we really feel should not being absolutely mirrored in our share worth. Lastly and likewise talked about by Ruy, due to the tireless efforts and dedication from our groups over the previous 3 years, we have now accomplished efficiently the clearing of C-band a lot forward of schedule. Upon on authorised certification from SEC over the approaching months or weeks, might be entitled to obtain $3 billion or $2.45 billion after tax results. This may be anticipated to reach in our checking account a while in the course of the quarter 4 of this 12 months.

Shifting now to the web revenue stroll on Web page 9. Adjusted EBITDA was €15 million decrease in comparison with the primary half of final 12 months, and it was pushed by primarily 4 parts. Now first was the constructive scope impact from the acquisition of DRS GES in August of final 12 months and ForEx results of the stronger U.S. {dollars}, which stood at 1.08 versus the euro in H1 of this 12 months in comparison with 1.10 within the final first half of the 12 months. The second element was the expansion in community of €15 million or 3.1% year-over-year. This included a continued sturdy surge in Mobility by about 14% year-over-year and periodic fastened information income of €7 million that we had acknowledged in quarter 1 of this 12 months, as we had already highlighted in our earlier earnings name.

We’re already seeing a flattening of the decline curve in Video, which declined 3.5% year-over-year, excluding the periodic impact, and notably solely by 2% decline in quarter two year-over-year. Recurring OpEx was larger by €20 million year-over-year as anticipated resulting in a decline in adjusted EBITDA by €50 million.

Beneath adjusted EBITDA, the primary results resulting in an adjusted internet revenue of €116 million. We’re virtually fully non-cash significantly exhausting depreciation linked to SES-17 being in service, extra amortization and alter in ForEx affect of adverse €28 million primarily as a result of acquire of €26 million that we had acknowledged final 12 months in first half of the 12 months. In the meantime, decrease curiosity expense contributed with a constructive €11 million in H1 of this 12 months in comparison with final 12 months. The distinction of €24 million between adjusted internet revenue and reported internet revenue of €92 million is defined by internet C-band expense of €10 million and sure non-recurring objects totaling €20 million, together with restructuring and M&A-related prices. Tax profit on these important particular objects amounted to €7 million.

Shifting now to Web page 10. We proceed to focus and preserve a robust and sector-leading stability sheet with investment-grade metrics and this stays a robust differentiator and supply of worth creation for our shareholders. Adjusted internet debt as of thirtieth June was €3.9 billion. We now have wholesome low value of funding at round 3% with common maturity of over 7 years and with no senior debt maturities within the close to time period.

Liquidity stays fairly sturdy over €1.8 billion, which incorporates €1.5 billion of dedicated credit score amenities and over €300 million of money in financial institution. Leverage stood at 3.6%, basically unchanged from the tip of 2022. Reimbursement of C-band clearing value is transferring at a slower tempo than our expectations, however we’re persevering with to have interaction with the clearinghouse, and excellent news is that in the course of the previous quarter, we obtained an additional $137 million taking now the full cumulative reimbursements to over $860 million. This leaves roughly $0.5 billion of pending value reimbursements, which we’d count on to recuperate principally throughout this 12 months or throughout 2024.

As already talked about, we have now different C-band and powerful visibility to the Section II incentive funds. As soon as we safe the clearing certification from the SEC over the approaching weeks, we are going to then have about 90 to 60 days earlier than the complete $3 billion of proceeds begin to arrive at our checking account from a number of licensees. We stay absolutely dedicated to utilizing these proceeds in a disciplined method and in the most effective curiosity of our shareholders.

With that, I’ll hand over again to Ruy for the conclusions.

Ruy Pinto

Thanks, Sandeep. To sum up, should you can flip to Web page 12, please. Our sturdy begin to 2023 means we’re nonetheless observe to realize our monetary targets for the 12 months. I’ve to say that we’re extraordinarily happy with that final result. The share buyback program that we simply introduced demonstrates our confidence within the long-term fundamentals of our enterprise and is a worth accretive use of capital. We imagine is a robust sign to our shareholders and to the market of how assured we’re in our future.

Our O3b mPOWER program is transferring ahead, and we count on to be serving clients from the tip of this 12 months. And eventually, final however definitely not least, we have now executed the C-band clearing and are actually centered on securing certification from the SEC and receiving the $3 billion fee in This fall effectively inside this 12 months. And this can make sure the continued power of our stability sheet.

With that, we’d be pleased to take questions. Richard, please?

Query-and-Reply Session

Operator

Thanks. [Operator Instructions] We’ll take our first query from Nick Dempsey at Barclays. Your line is open. Please go forward.

Nick Dempsey

Sure, good morning. First query, I’m wondering should you may simply give us a number of extra particulars concerning the technical situation that you just talked about with mPOWER at the start, Ruy. Simply to delve into that slightly bit deeper and to grasp the potential affect additionally whether or not that situation may have an effect on the satellite tv for pc is but to be launched? Second query, was a specific increase to Video from sports activities and occasions in the latest quarter or else I’m not likely positive if I perceive why it’s improved as a result of your feedback are pretty comparable about Q1 as Q2, however the progress price is healthier. And the third query, should you accomplished the clearing course of and money is sitting there to provide you $3 billion, why is it not potential to get the €500 million of reimbursements or sorted out within the subsequent couple of months, why is that going to be unfold over ‘23 and ‘24?

Ruy Pinto

Thanks, good questions. Let me take every one by one. On mPOWER, this – we have now a extremely complicated new expertise payloads that alongside our companions, Boeing, we are actually flying. It’s commonplace so that you can have – I’ll offer you a really shut instance. Generally your circuit break in your own home will journey and also you simply go and produce it again on. That’s poor analogy, however nonetheless it’s an analogy. So we’re not overly involved, however we wish to ensure that we have now no gremlins or hiccups after we deploy these companies. And that’s why we have now been very clear disclosing this phenomena, this spurious occasion, however we’re not actually fearful about any long-term and even short-term impacts of a bit. On the second query, Sports activities and Occasions, I’d defer to Sandeep on any feedback on the precise numbers, if I could, Sandeep?

Sandeep Jalan

Sure. So on Sports activities and Occasions, it is a low-margin enterprise, however clearly on a progress trajectory. And after post-COVID, we’re beginning to see again this sturdy search within the Sports activities and Occasions. These should not very excessive margins as a result of these should not satellite tv for pc revenues. So these are decrease margins. However clearly, primary, faucet a few of our satellite tv for pc capacities, but in addition add some service revenues and income. So that’s persevering with to develop. It’s a number of hundreds of thousands, however it’s on a complete base income of about €25 million. But it surely’s on a progress pattern as we had informed and Video, there are some companies, new Sports activities and Occasions, which additionally contains retail B2C enterprise at depos, which additionally has been on a progress trajectory. Clearly, within the present circumstances, as that with among the financial atmosphere, this enterprise is just not rising, however it stays a really wholesome enterprise and with a really wholesome income as effectively.

Ruy Pinto

And on the third query, Nick, the reimbursements, the clearing home has a job of checking of the reimbursements. We’re assured that we’re going to get them, however it’s a laborious course of. Their job is to scrutinize them and they’re doing their job. Our job is to elucidate them. And we have now been very profitable in doing that thus far. It simply takes time. That’s the character of the reimbursement course of. I believe we have now made superb progress, however it’s one thing that may be very tough to hurry. I don’t know, Sandeep?

Sandeep Jalan

Sure, what I wish to add, clearly, Nick, the method stays for much longer than what we’d count on however we have now continued to get the reimbursement, that’s necessary with the delays. And second, it’s additionally necessary to know that we’re additionally entitled to see and belief on the reimbursement, proper? So these delayed – I imply they aren’t dropping something from the curiosity standpoint, so curiosity also needs to come again within the recoveries. However sure, from our group standpoint, we’re doing the whole lot that we are able to do to ensure that we give all the precise documentation and dealing with taking part in home day in and time out and there’s a devoted group engaged on this to speed up. And that demonstrated €860 million of reimbursement has come. And the general non-reimbursement element stays on the identical ranges of under €100 million that we had indicated. Nothing modifications there.

Nick Dempsey

Can I simply follow-up on the primary one? Are you able to possibly clarify to non-technical individuals precisely what the anomaly was? What it affected on the satellites? That’s what I didn’t actually perceive.

Ruy Pinto

I attempted to give you, Nick, a poor analogy of the circuit breaking in your house. It’s poor, however it’s considerably correct. I imply I’m not even calling it an anomaly, proper? That is only a spurious or a sporadic swap off that you’ll there and also you flip it again on. Now in our enterprise, we like to grasp the whole lot that occurred in area. And that’s why, first, I discussed it, and that’s why we’re altering our procedures to take that under consideration. We will rapidly recuperate from it, however we’re simply being clear right here.

Nick Dempsey

Okay, thanks.

Operator

We’ll now transfer on to our subsequent query from Roshan Ranjit at Deutsche Financial institution. Your line is open. Please go forward.

Roshan Ranjit

Nice. Good morning, everybody. Thanks for the questions. Truly I acquired 4 very fast ones, truly. Only a follow-up on Nick’s query on Video. Might you simply run by way of any large renewals that we should always count on arising within the second half of the 12 months? As Nick talked about, H1 was pretty sturdy. So simply to grasp the traits into the second half of the 12 months there, please. And mobility, a robust quarter however progress barely down on Q1. Any competitors results from Starlink? I do know they’ve been making a little bit of a push into mobility, significantly in maritime or is that this a pure wait till we get extra capability on, after which we will deploy capability and new contracts to the purchasers? And two very fast ones on, I suppose, the C-band firstly. It’s fairly clear. It looks like issues transferring a bit sooner than we – you had anticipated. Beforehand, you talked about December, now you’re speaking about This fall? Are we speaking about possibly first half of This fall till you get the money in there? And final query, extra technicality. The €150 million buyback, I believe that’s the authorization you’ve got from the AGM, how rapidly are you able to return to name an AGM to extend that quantity? Thanks.

Ruy Pinto

Roshan, thanks. Thanks for the questions. Truly, I’ve to say I don’t really feel that we have now any short-term large renewals on Video that I’m conscious of which are key for our long-term efficiency on Video. Telefonica was one. And as I discussed, it was an extended negotiation with a long-term buyer, Telefonica. And I really feel that we had a win-win with that, significantly new with truly, it takes us up into 2030 on that contract. And that’s actually pleasing that we have now that long-term visibility of Video. On the mobility, and your query, Q1 and Q2 and competitors, I imply, we shouldn’t fake that we don’t have elevated competitors within the cruise market or within the mobility phase. Everyone knows that Starlink is deploying at tempo. The attention-grabbing side there from my perspective is that we nonetheless have a most popular relationship with our clients even on our clients have a look at opponents similar to Starlink, they arrive to us. And that permits us to protect worth, protect the client relationship and shield our place in that market as a lot as we are able to, once more, within the part of fairly naturally elevated competitors. The expansion in mobility is pushed by Maritime and truly, it’s greater than 30% year-on-year, primarily on new cruise vessels with tools installs. And that outlines the power and it’s mirrored in Q2. So it’s not straightforward, however we really feel comfy with our place. On the C-band quest on the €150 million was on the buyback, why don’t I defer to Sandeep once more for extra element.

Sandeep Jalan

Sure. So on the C-band, clearly, the clock is beginning to tick. As we mentioned, we’re operating a lot forward of the unique schedule, which was the deadline of December 5 2023. So the submitting was made already final month in July. There was a technical 10-day interval window, which expired for the licenses to have the ability to object. So now FCC has one other 30 days window, to ensure that all of the processes checked, all of the documentation is checked and that course of is ongoing. We count on that course of to finish inside the subsequent weeks. And after that, mainly, the following step of the method begins, which is mainly issuing the bill and that second, we’d already acknowledge the revenue as quickly because the FCC clears as a result of at that second, we get entitled to the cash. After which there’s a 60-day window plus every week for the cash – for the licenses to pay. In order that successfully lands the proceeds to reach checking account topic to, in fact, having no objections from the FCC or no remarks, which clearly, we’re not anticipating any large remarks as a result of there was a meticulous work round that. On the €150 million, our present AGM authorization is €150 million, €20 million A shares and €10 million B shares, and that’s the program that we’re saying and that is already a foster step, and we’re very happy with this foster step. And clearly, as per the AGM authorization, any additional buyback would require technically one other approval of shareholders and clearly that approval itself gone to bottleneck, if and after we determine to take action.

Ruy Pinto

Let me simply emphasize once more that we have now no cause to imagine that we’ll not have – that we’ll not obtain the inducement funds earlier than the tip of the 12 months. In fact, it’s not within the financial institution and that it’s within the financial institution, it’s not within the financial institution. However we have now completely no cause to imagine that we’re not on observe on that course of.

Roshan Ranjit

That’s very useful. Thanks rather a lot, guys.

Operator

Thanks. We’ll take our subsequent query from Carl Murdock-Smith at Berenberg. Your line is open. Please go forward.

Carl Murdock-Smith

That’s nice. Thanks very a lot. First query, I used to be simply questioning should you may present a bit extra commentary on the continued courtroom case course of when it comes to the C-band declare with Intelsat and the current developments there when it comes to going ahead, what the following steps are and your confidence in making any progress there? Secondly, I used to be questioning should you may make some feedback on IRIS squad and the time line there going ahead and your potential scale of involvement? After which third, I used to be simply questioning should you may present a number of extra feedback round what stage of testing we’re at with O3b mPOWER 5 and 6 to supply us with some reassurance that they are going to certainly be launched this quarter? Thanks.

Ruy Pinto

Carl, thanks for the questions. On the SES Intelsat litigation, from our perspective, the excellent news is that the choose the U.S. Courtroom of Appeals’ Decide upheld our attraction and truly reverse the case to the chapter cost asking them to evaluate their resolution of not awarding us SES, any damages. It’s actually excellent news. And having the case again within the chapter courtroom clearly signifies that the unique resolution was not the most effective one, was not the precise one. We take a variety of exhausting from that. Having mentioned that, this courtroom case is – they take their time. We now have no management over the timing of an schooling by the chapter courtroom choose. However once more, we take half from the truth that the applaud indicated that the unique judgment was not right. So we’re comparatively bullish. It’s tough to foretell that that is now in our favor on the finish of the method. On IRIS 2 [indiscernible], first, we’re actually happy and impressed by the progress that the European Fee has made on the IRIS 2 program for such a posh program that required European Parliament approval and funds allocations and so forth, the fee is continuing at tempo, and we’re matching that tempo as a part of our consortium. The fee has said that they’d count on a contract award, a 12 years contract award starting of subsequent 12 months, Q1, Q2. In fact, it’s tough to foretell and there might be a variety of exhausting work from SES.

We now have a devoted group of IRIS 2 and our consortium companions, Hispasat, Eutelsat, Airbus and Thales to place collectively a compelling proposal to the fee that addresses their necessities, includes a degree of privateness funding and evolves a degree of capital and operational investments from the fee and the European House Company. That’s an entire method of claiming that this isn’t a brief course of. We thought-about most win for SES when it comes to being below contract alongside our companions by subsequent 12 months. We expect there may be an upside to this course of, however it’s not a course of which you can rush and there might be complicated negotiations all through the following few months and we are going to preserve you guys, in fact, posted on the upside that’s in that program. We firmly imagine in greatest upside for each SES and the SpaceRISE consortium companions. On Satellite tv for pc 5 and 6, the satellites are basically prepared and present process extra testing in El Segundo we have now a slot with SpaceX in Q3 for the launch, however once more, repeating what I simply meant, we wish to be doubly positive that they are going to carry out as we would like and count on for our clients in area. You don’t need us to hurry this and we’re not dashing, however we’re optimistic these items occur in complicated packages. And these are literally not worrying in my e book.

Carl Murdock-Smith

That’s nice. Thanks very a lot.

Operator

Thanks. And our last query comes from Terence Tsui at Morgan Stanley. Your line is open. Please go forward.

Terence Tsui

Sure. Thanks very a lot. Good morning, everybody. I’ll simply stick to 2 questions, please. The primary one is simply on Video. I simply wished to press you guys a bit extra on what you see because the outlook for Video. Previously, you talked about flattening the curve. It appears the curve has been flattened – was a 2% decline this quarter. Are you extra assured now going ahead which you can see possibly like a low single-digit decline sooner or later versus like a mid-single digit to excessive single-digit decline that we’ve seen prior to now? That was my first query. After which my second query was simply round C-band proceeds. I do know you’re reluctant to say what you’ll use the proceeds for. However I’m simply to know that if the FCC timing goes as deliberate and the whole lot goes as deliberate, when will you decide to a call on using the C-band? Thanks.

Ruy Pinto

Thanks for the questions. On Video, I believe we have now improved our efficiency on Video given the intangible secular traits that we accustomed to. We nonetheless imagine – we nonetheless strongly imagine within the power of our neighborhoods, the most effective instance being, in fact, the [indiscernible], the German market. And we additionally do imagine that our stickiness with clients doesn’t simply come from the neighborhood, our HD+ enterprise in Germany, for instance, has been performing effectively. It’s a little bit of a worthwhile exception in my e book, the place we have now a small B2C enterprise in Germany. However the level is that it will increase the stickiness with our clients. It offers longevity and it places us in a greater place to – I wouldn’t say utterly arrested decline however carried out higher than our opponents and follow very – to low single digits decline in Video. So I’m truly extra optimistic now than we have been a few years in the past on that entrance.

On the C-band proceeds, I’ll let Sandeep remark as effectively, however we’re going to be smart and what does that imply? We’re going to have a mix of delevering our stability sheet, conserving it as sturdy as it’s and conserving or working very exhausting to maintain our investment-grade place. We’re going to have a look at returning some proceeds to our shareholders. However we’re additionally going to have a look at how can we effectively and sensibly, prudently deploy among the proceeds to ensure the expansion of the corporate in years to return. It’s an actual good place to be, should you ask me, and we shouldn’t – I shouldn’t understate that. Together with your query on timing, timing is all the time a tough query, however we are going to come again to the market, in fact, with our path of journey and all that. Sandeep…

Sandeep Jalan

I simply say and we’re already taking step one whereas the cash is just not in our financial institution. We’re already taking step one at this time with €150 million buyback. And clearly, there may be extra to return, so keep tuned. It’s clearly a subject which is gathering our consideration and our focus and all that we’ll do is be certain that rather a lot, we nonetheless disciplined and deal with the long-term progress and in the most effective curiosity of our shareholders.

Terence Tsui

Thanks very a lot.

Operator

Thanks. I’ll now hand it again to Richard for closing remarks. Thanks.

Richard Whiteing

Thanks, Laura. That concludes this morning’s name. As I mentioned, myself and the group can be found to have any follow-up questions. In any other case, wishing you a beautiful Thursday and an awesome August. Thanks very a lot, and have an awesome day.