January 06, 2025 12:50 GMT
COMMUNICATIONS: SES Curve Widens On Reports Of Italian Gov’t Talks With SpaceX
COMMUNICATIONS
SESGFP Baa3/NR/BBB
More Starlink-related headline risk for SES though this time from the government sector (~25% of FY23 revenue) as opposed to the mobility sector (~14%) as per the airline connectivity headline-related widening we saw in 2024.
- SES senior curve has moved wider (26s +2bp, 27s +23bp, 28s +12bp, 29s +15bp). 2.875% perp is -40c though the equity is >3% higher. Eutelsat bonds are up to 2.7pts lower.
- BBG reported that Italy is negotiating a USD 1.6bn, 5yr deal with SpaceX for secure government services, including military and emergency communication. The deal has been under review since 2023 and has been approved by Italy’s intelligence and defence agencies with final agreement pending. Alternatives like the EU's IRIS satellite system (SES is part of the consortium appointed to design and operate the system) were deemed costlier.
- Also noting the announcement that United Airlines is to launch Starlink Wi-Fi on regional jets by spring and on all planes in 2025. The initial contract was the cause of a widening in SES back in Sept.
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