SES, the Luxembourg-based satellite communications giant, has unveiled its financial results for the first quarter ending March 31, revealing a business in the midst of a profound structural transformation. The latest figures, released on May 12, indicate that the company’s performance is broadly in line with analyst expectations, bolstered significantly by the full consolidation of Intelsat. As the operator pivots away from its traditional roots in video broadcasting toward a data-centric, multi-orbit future, the Networks division has emerged as the primary engine of growth, now accounting for two-thirds of the group’s total revenue.
In a move that underscores a rigorous approach to capital discipline, SES also announced the cancellation of two major Geostationary Orbit (GEO) satellites. This decision reflects a broader industry trend where legacy operators are re-evaluating the long-term viability of traditional GEO assets in the face of rising competition from Low Earth Orbit (LEO) constellations and Medium Earth Orbit (MEO) innovations. By optimizing its capital expenditure (CapEx) and focusing on high-return projects, SES aims to fortify its balance sheet while navigating a rapidly evolving telecommunications landscape.
Financial Performance and the Intelsat Integration
For the three months concluding at the end of March, SES reported overall revenues of 847 million euros ($997 million). This represents a substantial increase of nearly 50% compared to the same period in the previous year, a figure that slightly outperformed consensus analyst estimates. However, the dramatic year-on-year growth is primarily attributed to the strategic acquisition and subsequent consolidation of Intelsat, which was fully integrated into SES’s financial reporting starting in July of last year.
The integration of Intelsat has not only scaled the company’s operations but has also fundamentally altered its revenue profile. When stripping away the impact of the acquisition, the underlying performance shows a more nuanced picture of steady but cautious growth. Despite the complexities of merging two of the world’s largest satellite fleets, SES leadership maintains that the business is in "good shape," with the integration synergies beginning to manifest in the company’s operating margins.
The Ascendancy of the Networks Division
The most striking revelation in the Q1 report is the continued dominance of the Networks side of the business. Revenue from this segment reached 556 million euros ($654.5 million) for the quarter, representing over 100% growth compared to the previous year’s first quarter. More significantly, Networks now accounts for 66% of SES’s overall revenues. This milestone marks a definitive departure from the company’s historical identity as a broadcast-heavy media business.
The surge in Networks revenue was underpinned by several key verticals:
- Mobility: This segment emerged as the star performer, with revenues reaching 259 million euros ($304.9 million), a massive leap from the 89 million euros ($104.8 million) recorded in the same quarter last year. The growth was driven primarily by the aviation and maritime sectors, where demand for high-speed, multi-orbit connectivity is at an all-time high.
- Government: Revenues in the government sector reached 189 million euros ($222.5 million), up by 50 million euros ($58.9 million) year-on-year. This growth reflects the increasing reliance of sovereign entities on secure, resilient satellite communications for defense and civil infrastructure.
- Fixed Data: This segment contributed 109 million euros ($128.3 million) to the quarterly total, an increase of 41 million euros ($48.3 million) over the previous year.
Fleet Rationalization: The Cancellation of IS-41 and IS-44
As part of its 2026 CapEx guidance and a broader strategy to optimize its fleet, SES confirmed the cancellation of the IS-41 and IS-44 GEO satellites. These satellites were originally ordered by Intelsat from Thales Alenia Space in 2022, based on the flexible "Space Inspire" software-defined product line.
Chief Financial Officer Lisa Pataki explained to investors that the decision was rooted in the company’s internal rate of return (IRR) thresholds. The satellites, which were slated for a 2028 launch, no longer met the financial criteria required for continued investment. IS-41 was designed to provide coverage for North America and Latin America, targeting aviation, maritime, and government services. IS-44 was intended for the Asia-Pacific region, serving similar verticals alongside media services.
"We’ve spoken about the need to rationalize the fleet of GEO satellites, both from the ground and the spacecraft in the sky," Pataki stated. "We’ve taken some pretty hard decisions on which satellites we need in our fleet, which satellites can use life extension vehicles, and therefore which satellites we no longer need to procure."
This move follows a similar decision by Eutelsat, which recently canceled its procurement of the Flexsat Americas satellite, also to be built by Thales Alenia Space. These cancellations highlight a strategic pivot among GEO operators who are now prioritizing "life extension" technologies—which allow existing satellites to remain operational longer through robotic refueling or docking—rather than commissioning expensive new hardware in an uncertain market.
Analyst Perspectives: Growth vs. Deterioration
While the headline figures suggest a robust quarter, equity analysts have provided a more critical breakdown of the underlying trends. One major investment bank analyst, speaking on the condition of anonymity, noted that while Q1 revenues were 2% above consensus and Adjusted EBITDA was 8% above expectations, the "like-for-like" (LFL) revenue growth was a more modest 3.1%.
The analyst pointed out that the EBITDA growth was heavily influenced by a 81 million euro ($95.3 million) planned contract restructuring benefit in the aviation sector. Without such one-off items, the organic growth would appear less pronounced. Furthermore, the Media division continues to face headwinds, with revenues declining 11% LFL to 285 million euros ($335.5 million). This decline is attributed to the "SD to HD" switch-off in mature markets, capacity optimization, and the ongoing financial impact of the bankruptcy of a major Brazilian customer, Oi.
Ben Rickett, a satellite equity analyst at New Street Research, offered a more cautious take, suggesting that some underlying trends show "deterioration." Rickett estimated that if the 81 million euro one-off benefit were excluded, Networks revenue would actually be down approximately 6% year-on-year, and total revenue would be down roughly 8%.
Rickett also raised concerns regarding the Government segment. While reported growth was strong, he argued that it was largely driven by "zero-margin" revenue from the IRIS2 project—a European Union initiative where SES acts as a pass-through for subcontractors. "Excluding IRIS2 revenue, we estimate that Government revenue was negative last year and deteriorated in this quarter," Rickett noted. He further cautioned that expected new U.S. government contracts in the second half of the year might not materialize due to budget cuts and administrative shifts in Washington.
Aviation and Multi-Orbit Strategy
Despite the analytical scrutiny, SES CEO Adel Al-Saleh remains optimistic, particularly regarding the company’s leadership in the aviation market. The company’s multi-orbit in-flight connectivity (IFC) system is now operational on nearly 600 aircraft. This system leverages both GEO and MEO satellites to provide seamless, high-bandwidth internet to passengers, a key differentiator in a market increasingly challenged by LEO-only providers like Starlink.
"Demand for the multi-orbit Electronically Steered Antennas (ESAs) continues to grow," Al-Saleh said. He highlighted a recent win with Japan Airlines for more than 40 long-haul aircraft and a milestone agreement with Boeing to provide factory line-fit solutions for SES’s multi-orbit system across all Boeing aircraft models. This factory-fit status is a significant competitive advantage, as it simplifies the installation process for airlines purchasing new fleets.
In the government sector, Al-Saleh emphasized the extension of the EGNOS GEO-1 satellite service agreement with the European Union Agency for the Space Programme (EUSPA) through 2030. This extension ensures the continued delivery of high-precision navigation services for aviation and critical infrastructure across Europe, reinforcing SES’s role as a vital partner for sovereign space requirements.
Broader Industry Implications and Future Outlook
The Q1 results from SES serve as a microcosm of the broader shifts occurring within the global satellite industry. The move toward "software-defined" satellites and the rationalization of GEO fleets suggest that the era of massive, fixed-purpose orbital assets is giving way to a more agile, hybrid approach.
The cancellation of IS-41 and IS-44 signifies that even the largest operators are no longer willing to "build it and they will come." Instead, capital is being diverted toward multi-orbit capabilities—specifically the O3b mPOWER MEO constellation—and strategic partnerships that offer more immediate and flexible returns.
As SES moves into the remainder of the year, the focus will remain on the successful integration of Intelsat’s assets and the stabilization of the Media business. While the Networks division provides a clear path for growth, the company must navigate the complexities of government contracting and the intense pricing pressure in the fixed data market. The industry will be watching closely to see if the "multi-orbit" promise can deliver sustained organic growth, or if the "deterioration" noted by some analysts proves to be a more persistent challenge.
For now, SES has positioned itself as a leaner, more data-centric entity, willing to make difficult decisions regarding its orbital fleet to ensure long-term financial health. The transition from a television-centric broadcaster to a global connectivity provider is nearly complete, but the competitive landscape of the "New Space" era ensures that the path forward will be anything but static.
