Satellite operator, SES, has rescheduled the commencement of its O3b mPOWER satellite constellation service to Q2 2024 due to power module issues. The sporadic power module switch-offs have compromised the expected lifetime and capacity of initial satellites, leading to a contract renegotiation with Boeing (NYSE:BA) to upgrade five satellites and add two more.
Despite Boeing's reported $315 million Q3 losses from an undisclosed satellite program, SES plans to deploy additional satellites without impacting its Capital Expenditure (CapEx) or relying on insurance proceeds. The launch of two more mPOWER satellites via a SpaceX mission will facilitate service commencement in Q2 2024.
The delay is expected to cause a mid-single-digit percentage reduction in SES's revenue and adjusted EBITDA for 2024. However, SES remains on track with its 2023 financial outlook under CEO Ruy Pinto's leadership, with Adel Al-Saleh set to take over in February next year.
In Q3 2023, SES received a $3 billion pre-tax payment from the Federal Communications Commission (FCC) for accelerated C-band clearing, which enabled a $159 million share buyback program starting in November. SES's Q3 revenue was 507 million euros ($537 million), with the Video segment reporting 241 million euros (a 2.5% YoY decrease) and the Networks segment delivering 267 million euros (a 3.1% YoY increase). These figures include Government's 14.7% revenue growth, Fixed Data's 6.3% revenue growth, and Mobility's 1.5% revenue growth.
SES is also redeeming a hybrid bond worth 550 million euros in January 2024. Further launches, including mPOWER 7 and 8 in the second half of 2024, and mPOWER 9-11 in 2025, will incorporate power modifications. The last two satellites, mPOWER 12 and 13, are scheduled for a 2026 launch. SES is considering potential insurance claims for the defects.
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