March 2, 2020 / 9:46 AM / a month ago

CORRECTED-UPDATE 1-SES cuts FY outlook, halves dividend, cites investment peak

(Corrects SES description in 2nd paragraph)

* Lowers 2020 EBITDA, revenue outlook

* Outlook excludes C-band impact

* Halves 2019 dividend

* Potential separation of networks business

* Shares down 10%

March 2 (Reuters) - Satellite operator SES cut its financial forecasts for this year and halved its proposed 2019 dividend on Monday, projecting a slowdown for the video division and a slower pickup in its networks business as well as short-term investment peak in networks in 2021.

SES, which enables telecoms operators to provide Wi-Fi services for aircraft and ships and is one of the holders of licenses to a so-called C-Band frequency, said the forecasts excluded any impact from a potential release of parts of that spectrum for 5G networks.

On Feb. 28, the Federal Communications Commission (FCC) voted in favour of adopting rules to auction a key band spectrum for wireless use that includes up to $9.7 billion in potential incentive payments to satellite companies.

“We are delighted to express our support for the plan that FCC Chairman Ajit Pai announced last Friday to repurpose a portion of the C-Band for 5G operations in the United States. This is a win-win-win outcome,” Chief Executive Steve Collar said in a statement.

Yet the outlook cut and proposed 2019 dividend of 40 cents per share, half of previous year’s payout and analysts’ forecast, pushed the stock of the Luxembourg-based company down by as much as 10.6% to more than a 15-year low.

“Despite C-Band plan FCC approval Friday...FY20 guidance implies no growth which is very negative in our view,” Credit Suisse said in a note.

The group now expects its 2020 earnings before interest, taxation, depreciation and amortisation (EBITDA) to come within a range of 1.15 billion euros to 1.21 billion euros, and revenue between 1.92 billion euros and 2.00 billion euros compared with earlier forecast ranges of 1.26-1.34 billion euros and 2.06-2.16 billion respectively.

SES also announced the launch of the next phase of its strategic transformation plan, called Simplify and Amplify that includes consideration of the potential separation of its networks business within the company.

The group forecasts its investments will spike to 1.35 billion euros in 2021 from 360 million euros in 2020, and then gradually fall through 2022-23 to 250 million euros in 2024.

($1 = 0.9057 euros)

Reporting by Pawel Goraj; Editing by Subhranshu Sahu and Tomasz Janowski

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