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TAMPA, Fla. — SES moved to reassure investors about its financial stability Feb. 18 after Moody’s downgraded the Luxembourg-based satellite operator’s outlook from stable to negative.
The ratings agency affirmed SES’s Baa3 long-term issuer rating — one notch above non-investment grade — while citing competitive pressures and uncertainty around future revenue streams.
In response, SES issued a financial update ahead of its earnings announcement next week, stating that full-year 2024 results are expected to exceed expectations, with revenue at the upper end of its forecasted 1.94-2 billion euro ($2-2.1 billion) range.
Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, is also set to surpass its 950 million to 1 billion euro outlook.
SES said its planned $3.1 billion acquisition of Intelsat remains on track to close in the second half of 2025, positioning the combined company for low- to mid-single-digit annual revenue growth from 2024 to 2028, mid-single-digit EBITDA growth, and strong free cash flow generation.
“SES remains committed to maintaining Investment Grade metrics,” the company stated.
Market challenges
Despite these growth projections, Moody’s cited the Intelsat acquisition in its outlook downgrade, pointing to the expected rise in net debt to finance the deal as a factor weakening SES’s financial profile.
“The outlook change to negative reflects the increased risk in terms of operating performance and deleveraging path of the combined SES and Intelsat entity,” Moody’s Ratings vice president Ernesto Bisagno said, “owing to growing competition and higher innovation risk in the satellite industry.”
However, Moody’s noted that deleveraging could begin in 2026 if the merged group achieves synergies and earnings growth. A potential sale of additional C-band spectrum assets could also accelerate this process, though the timing and potential proceeds remain uncertain.
SES, which operates a fleet of geostationary and medium Earth orbit satellites for broadcast and broadband services, views the Intelsat acquisition as a key growth driver for its connectivity business.
Intelsat has a close partnership with French operator Eutelsat’s low Earth orbit network OneWeb — the only meaningful competitor today to SpaceX’s Starlink in LEO.
While Moody’s expects demand for connectivity services to grow, the agency warned of a potential risk of oversupply.
“This is due to the continued supply growth from non-Geostationary Orbit (NGSO) Satellites, particularly in the consumer broadband market — a market not targeted by SES and Intelsat,” Moody’s said.
“Although SES and Intelsat have no operations in this market, we believe there is a risk that some of the surplus capacity in consumer broadband could be redirected to other market verticals where the combined entity has a solid position, such as maritime, aviation and government, potentially leading to overcapacity in those areas.”
Still, Moody’s noted that some government, maritime and aviation customers have stricter regulatory and technical requirements, making them less likely to adopt excess capacity from other markets.
To counter competitive pressures, the agency said the combined SES-Intelsat group plans to differentiate itself with multi-orbit solutions, highlighting SES’s expertise in this area as a key advantage, particularly as it continues to benefit from U.S. and European initiatives aimed at securing resilient space connectivity.
Last month, Moody’s downgraded Eutelsat’s long-term corporate family rating from Ba3 to B2, pushing it further into non-investment-grade territory.
Bisagno said that downgrade reflected “Eutelsat’s prolonged underperformance compared to our previous expectations, in light of the slower-than-expected contribution from OneWeb,” where ground segment issues continue to delay global services.
On Feb. 14, Eutelsat recorded a 535 million euro goodwill impairment on its geostationary assets, among other strategic shifts to counter Starlink’s growing dominance.
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