20-F: SES Navigates Intelsat Integration, Reports Revenue Surge Amid Net Loss

SES reports significant revenue growth driven by the Intelsat acquisition, despite recording a net loss for the year and facing credit rating downgrades and ongoing internal control remediation.

Summary

• Total revenue increased by 31.3% to €2,627 million for FY 2025, compared to €2,001 million for FY 2024, primarily due to the Intelsat acquisition.
• The Intelsat acquisition closed on July 17, 2025, for a cash consideration of $2.6 billion (€2.2 billion) and Contingent Value Rights (CVRs).
• Networks business revenue increased by 55.2% to €1,633 million in FY 2025, driven by the Intelsat acquisition and growth in Government, Fixed & Maritime, and Aviation segments.
• Media business revenue increased by 7.9% to €977 million in FY 2025, reflecting the Intelsat acquisition and mid-single-digit growth in the HD+ platform in Germany, partially offset by a Brazilian customer bankruptcy.
• A net loss after tax of €94 million was recorded for FY 2025, compared to a profit of €27 million in FY 2024.
• C-band repurposing income significantly decreased to €3 million in FY 2025 from €88 million in FY 2024, as the reimbursement program was completed.
• Operating expenses increased by 45.5% to €1,598 million in FY 2025, largely due to the Intelsat acquisition and the IRIS2 program.
• Depreciation expense increased by 28.4% to €836 million, mainly due to the Intelsat acquisition and new satellites (O3b mPOWER fleet, Astra 1P) entering service.
• Net impairment expense for space segment assets was €73 million in FY 2025, and for orbital slot license rights was €73 million, reflecting updated business assumptions and discount rate changes.
• Adjusted EBITDA increased by 16.3% to €1,196 million for FY 2025, primarily attributable to the Intelsat acquisition.
• Adjusted Net Debt increased significantly to €6,029 million in FY 2025 from €1,144 million in FY 2024, mainly due to the Intelsat acquisition financing.
• Cash and cash equivalents decreased by 69.5% to €1,075 million at year-end 2025 from €3,521 million in 2024.
• The company repurchased €63 million in principal amount of its €625 million Deeply Subordinated Fixed Rate Resettable Securities in January 2025.
• An insurance claim of €164 million related to first-generation mPOWER satellites was received in 2025.
• The IRIS2 Concession Agreement was signed in December 2024, with SES committed to developing, procuring, and operating 18 new MEO satellites.
• Moody's Investors Service downgraded SES's long-term corporate family rating to Ba1 from Baa3 in December 2025, and Fitch Ratings downgraded it to BBBfrom BBB in January 2026.
• The company had a fully protected contract backlog of €4.7 billion as of December 31, 2025, with a gross backlog of €6.6 billion.
• Material weaknesses in internal control over financial reporting were identified, with remediation efforts ongoing for deficiencies in design and implementation of controls over certain business processes.
• The fair value of Contingent Value Rights (CVRs) at acquisition was €737 million and remeasured to €755 million at December 31, 2025, with the increase mainly due to the time value of money.
• The FCC's current C-band proceeding could impact the value of the CVRs, with a proposal to repurpose another 100 to 180 MHz of spectrum by July 2027.
• SES's business with the U.S. government is subject to national security laws and FOCI mitigation measures, with non-compliance potentially leading to enforcement actions or loss of authorizations.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with cautious optimism. While the Intelsat acquisition drives significant revenue growth and strategic expansion, the reported net loss, increased debt, and credit rating downgrades signal financial pressures. The ongoing internal control weaknesses also add a layer of concern.

Positives

• Significant revenue growth of 31.3% to €2,627 million in FY 2025, largely driven by the strategic Intelsat acquisition.
• Strong growth in the Networks business unit, with a 55.2% increase in revenue, reflecting successful integration of Intelsat and expansion in key segments like Government, Aviation, and Fixed & Maritime.
• Successful completion of the C-band Accelerated Relocation Payment program, with final reimbursements received in 2023 and the program concluding in H1 2025.
• Receipt of €164 million in insurance claim proceeds related to technical challenges with first-generation mPOWER satellites.
• Signing of the IRIS2 Concession Agreement, positioning SES as a key partner in a significant European sovereign connectivity system.
• Adjusted EBITDA increased by 16.3% to €1,196 million, demonstrating improved operational performance post-acquisition.
• Maintained a substantial fully protected contract backlog of €4.7 billion, indicating predictable future revenue streams.
• Remediation of the material weakness related to the design and maintenance of information technology general controls by December 31, 2025.

Negatives

• Reported a net loss after tax of €94 million for FY 2025, a significant decline from the €27 million profit in FY 2024.
• C-band repurposing income decreased sharply by 96.4% to €3 million in FY 2025, indicating the winding down of a significant revenue source.
• Operating expenses increased substantially by 45.5% to €1,598 million, impacting overall profitability.
• Depreciation expense increased by 28.4% to €836 million, contributing to higher costs.
• Net impairment expense for space segment assets and orbital slot license rights totaled €146 million in FY 2025, reflecting asset value adjustments.
• Adjusted Net Debt increased significantly to €6,029 million, raising concerns about financial leverage post-acquisition.
• Cash and cash equivalents decreased by 69.5% to €1,075 million, indicating substantial cash outflows for the Intelsat acquisition and other activities.
• Credit rating downgrades by Moody's (Ba1 from Baa3) and Fitch (BBBfrom BBB) could increase future borrowing costs and affect financing flexibility.
• Ongoing material weakness in internal control over financial reporting related to deficiencies in design and implementation of controls over certain business processes, including segregation of duties and documentation.

Risks

• Launch delays or failures, or in-orbit damage/destruction of satellites, could lead to total or partial loss of satellites, lost revenues, and reputational damage, as insurance policies generally do not cover lost revenues or consequential losses.
• Actual lives of satellites may be shorter than estimated design lives, leading to accelerated depreciation and reduced return on investment.
• Reliance on a limited number of launch providers and satellite manufacturers/secondary suppliers could lead to delays, increased procurement risks, and higher costs.
• Inability to obtain adequate satellite insurance coverage or increases in insurance premiums could adversely affect business and financial results.
• Damage or loss from events not covered by insurance policies (e.g., war, anti-satellite devices, cyber-attacks, terrorism) could result in material cost increases or revenue reductions.
• Failure to renew existing commercial agreements or renew them on less favorable terms could adversely affect revenue, especially with large customers.
• Exposure to general customer counterparty risk, particularly in developing markets, could lead to significant losses if customers fail to fulfill contractual obligations.
• Disruption or failure of information systems, satellite control, and operations networks due to unauthorized access, cyber-attacks, or other malfeasance could lead to service disruption, data loss, and financial penalties.
• International operations are subject to risks including political instability, foreign currency volatility, fraud, protectionist policies, and non-compliance with national security requirements and anti-bribery laws.
• Business with the U.S. government is subject to FOCI mitigation measures, and a breach could place all or part of the business at risk, potentially leading to financial penalties or loss of authorizations.
• Inability to retain and/or attract critical personnel due to competitive labor markets could negatively impact business objectives.
• Operations, systems, and ground infrastructure are subject to external threats like sabotage, terrorist attacks, and natural disasters, which are generally excluded from insurance coverage.
• Exposure to legal and arbitration proceedings, with unpredictable outcomes and potentially significant costs.
• Global economic turmoil, trade wars, tariffs, inflation, and rising interest rates could adversely affect demand for services, revenue, and financing activities.
• Impairment of intangible assets, property, plant & equipment, and assets in the course of construction could result from changes in business plans, market conditions, or technical issues.
• Strategic investments and external growth opportunities may not yield expected benefits due to uncertain market conditions, financing costs, or legal/regulatory issues.
• Increasing focus on lower-margin value-added services could dilute overall margins if not executed effectively.
• High competition from other satellite operators (GEO and LEO constellations like Starlink, OneWeb), terrestrial networks (fiber, 5G), and alternate distribution technologies (OTT streaming) could reduce demand and pressure pricing.
• Technological changes or industry shifts could render satellite telecommunications systems obsolete or less competitive, impacting demand for services.
• Failure to obtain and maintain required regulatory approvals (e.g., orbital slots, spectrum, market access) could prevent operations or expansion, leading to revenue loss and penalties.
• Uncertainty in regulatory frameworks in some jurisdictions may restrict operations or impose significant costs and delays.
• Reallocation of spectrum from satellite to terrestrial uses by ITU or national administrations could limit the use of bands for satellite services and increase fees.
• Coordination issues with other satellite operators regarding frequency and orbital locations could lead to interference, operational restrictions, and potential loss of rights.
• The FCC's current C-band proceeding (repurposing 100-180 MHz of 3.98-4.2 GHz spectrum) could impact the value of the CVRs and the remaining spectrum available for satellite services.
• The amount of Applicable Expenses incurred in connection with a Qualified Monetization event may significantly reduce any payment on the CVRs.
• The U.S. federal income tax treatment of the CVRs is uncertain, potentially affecting the amount, timing, and character of any gain, income, or loss.
• An active public market for the CVRs may not develop, limiting their value and resale options.
• Non-compliance with telecommunications and civil aviation regulations (FAA/CAA) could increase costs or require changes to services, particularly for the Commercial Aviation business.
• New EU space law and Digital Networks Act could increase licensing costs and affect spectrum access within the EU.

Future Outlook

The company expects to continue investing in satellites for replacement and new capacity, with projected GEO-MEO capital expenditure between €425-€475 million in 2025 and €325 million per year for subsequent years (excluding IRIS2). The IRIS2 program is expected to provide services from early 2030. Analysts anticipate a continued, gradual weakening of the USD in 2026. The FCC's proceeding to repurpose additional C-band spectrum by July 2027 remains a key future event that could impact CVR value. The company is also developing and implementing consolidated security policies and procedures as part of the SES-Intelsat integration.

Management Comments

• The Intelsat acquisition marks a significant milestone in SES's evolution, creating scale, strengthening competitiveness, expanding multi-orbit capabilities, and positioning SES to create long-term value for customers, partners, and shareholders.
• The combined company leverages its skilled teams with deep vertical expertise to deliver integrated multi-orbit, multi-band satellite and connectivity solutions to businesses and governments around the world.
• The new SLT membership is a balanced representation of both companies heritage and geographical locations.
• SLT remuneration must reflect the new larger, more complex organization, with a presence spanning across Europe and the US.
• The evolution of the SLT performance philosophy is aimed at increasing accountability, while also recognizing our globally diverse talent, operating in a highly competitive and complex ecosystem.
• The Remuneration Committee is committed to continuously reviewing, benchmarking and evaluating these structures to ensure that they reflect the complexity, size, geographical presence, and Company's strategic objectives, especially following significant activity or transactions such as the acquisition of Intelsat.
• The CEO performance-driven equity compensation is tightly linked to shareholders value creation, reinforced further with SES Performance Shares payout tied to synergy execution and key company financial metrics (EBITDA, Net Debt).

Industry Context

StockSavvy.ai notes that SES's acquisition of Intelsat is a significant move towards industry consolidation, a trend observed among incumbent satellite operators seeking increased scale, operational efficiencies, and optimized capital expenditures. The company's multi-orbit strategy, combining GEO and MEO satellites with strategic access to LEO services, directly addresses the increasing competition from LEO constellations like SpaceX's Starlink and Eutelsat's OneWeb, which are expanding the overall satellite industry but also introducing disruptive capabilities. The emphasis on value-added services in the Networks segment reflects a broader industry shift to counter commoditization of traditional satellite capacity. The IRIS2 program aligns with the growing demand for secure, sovereign connectivity systems, particularly in Europe, amid heightened geopolitical tensions. The company's efforts to integrate AI, cloud services, and 5G/6G terrestrial network standards (3GPP NTN) are consistent with industry-wide technological innovations aimed at delivering more capable and cost-effective space-based infrastructure.

Comparison to Industry Standards

• SES's combined fleet of nearly 120 GEO and MEO satellites, including future planned launches, positions it as one of the world's largest and most advanced satellite networks, comparable in scale to major players like Eutelsat (incorporating OneWeb), Viasat (including Inmarsat), and SpaceX's Starlink.
• The company's multi-orbit approach, combining GEO and MEO with strategic access to LEO services, aligns with the industry trend towards hybridized networks to meet diverse customer requirements for high speeds, low latency, and reliability, differentiating from LEO-only providers.
• In the Maritime segment, SES is noted as the leading provider of connectivity at sea, serving five of the six major global cruise lines, indicating a strong market position compared to competitors.
• The HD+ platform in Germany, serving nearly 2 million paying subscribers with 44 High and Ultra-High definition channels, demonstrates a successful direct-to-consumer TV platform, a model that some traditional broadcasters are exploring to counter linear TV declines.
• The company's engagement in the IRIS2 program, a European Union flagship initiative, positions it uniquely in the sovereign connectivity market, a segment with increasing government investment globally.
• The identified material weaknesses in internal control over financial reporting, while being remediated, highlight a gap in public company readiness compared to established U.S. domestic public companies subject to SOX Act Section 404(a) requirements.

Management Changes

Corporate Governance

Legal Proceedings

• Intelsat License LLC entered into a consent decree with the FCC on August 12, 2024, to resolve the operation of Galaxy 35 at a slightly offset orbital location, agreeing to pay a civil penalty of $160,000 and implement a compliance plan.
• SES filed an initial notification of voluntary self-disclosure to OFAC on July 10, 2019, concerning potential compliance concerns related to satellite services resold to sanctioned entities or in sanctioned territorial waters. OFAC issued a Cautionary Letter on July 28, 2023, closing the case without civil monetary penalty.
• SES filed an initial notice of voluntary self-disclosure to OFAC on October 17, 2022, identifying potential violations of North Korean Sanctions Regulations. OFAC closed the case on October 10, 2023, without further action or penalties.
• The Indian Supreme Court issued a positive decision on January 13, 2026, ending litigation regarding disputed withholding tax obligations in India, leading to the release of a €29 million provision.

Related Party Transactions

• The State of Luxembourg holds a direct 1.77% voting interest in Class A shares and a 34.73% voting interest in Class B shares, and two indirect interests (12.30% and 11.85% total voting power) through state-owned banks (Banque et Caisse d'Epargne de l'Etat and Société Nationale de Crédit et d'Investissement), giving it significant influence over the Company.
• In 2025, the Company generated revenue of €32 million (2024: €31 million, 2023: €27 million) with departments of the government of the state of Luxembourg for communication services.
• Remuneration paid to directors for attendance at board and committee meetings in 2025 was €1 million (2024: €1 million, 2023: €1 million).
• Key management (Senior Leadership Team) received total compensation of €11 million in 2025 (2024: €10 million, 2023: €11 million), including €3 million (2024: nil, 2023: €2 million) of contractual severance payments in 2025.

Stakeholder Impact

• **Shareholders**: The Intelsat acquisition and associated financing have significantly increased the company's scale and strategic positioning, but also led to a net loss and increased debt, impacting short-term profitability and potentially future dividend capacity. Credit rating downgrades could affect the cost of capital and shareholder returns. The CVRs offer a speculative, uncertain future payment opportunity.
• **Employees**: The Intelsat acquisition led to a larger, more integrated organization, with new SLT appointments and expanded roles. Restructuring charges and severance payments indicate ongoing optimization programs affecting some employees. The updated remuneration policy aims to attract and retain global talent.
• **Customers**: The combined multi-orbit fleet and expanded service offerings (Networks and Media) aim to provide enhanced connectivity solutions, particularly in Government, Aviation, and Maritime segments. However, competitive pressures in the wholesale business and shifts in video consumption could impact customer demand and pricing.
• **Suppliers**: Dependence on a small number of satellite manufacturers and launch providers creates supply chain risks. The IRIS2 program and ongoing satellite procurement represent significant future business for suppliers.
• **Creditors**: Increased borrowings and credit rating downgrades by Moody's and Fitch indicate a higher risk profile for creditors, potentially leading to higher interest rates on future debt. The company's liquidity position, while still substantial, has decreased significantly.

Next Steps

• Continue remediation efforts for the remaining material weakness in internal controls over financial reporting.
• Develop and implement consolidated security policies and procedures as part of the SES-Intelsat integration.
• Evaluate the status of the IRIS2 contract execution and compliance with investment conditions, potentially proposing adjustments to the European Commission.
• Monitor the FCC's C-band proceeding regarding the repurposing of additional spectrum and its potential impact on CVRs.
• Make future contributions to Horizons 3 to cover escalating principal payments under a loan agreement.
• Invest in satellites for replacement and new capacity, with projected capital expenditure between €425-€475 million in 2025 and €325 million per year for subsequent years (excluding IRIS2).
• Repurchase additional principal amounts of Deeply Subordinated Fixed Rate Resettable Securities, with settlement on March 27, 2026.
• Hold the Annual General Meeting of shareholders on April 2, 2026, to vote on director appointments and dividend approvals.

Key Dates

Recommendation

The Intelsat acquisition is a transformative event for SES, driving substantial revenue growth and strengthening its market position in key segments. However, the immediate financial impact includes a net loss for FY 2025, a significant increase in net debt, and credit rating downgrades, which introduce financial uncertainty and higher cost of capital. While the strategic rationale for the acquisition is sound, and the company is actively addressing internal control weaknesses and pursuing growth initiatives like IRIS2, the integration risks, competitive landscape, and the speculative nature of CVRs warrant a cautious approach. A 'hold' recommendation is appropriate as investors should monitor the successful integration of Intelsat, the realization of synergies, the trajectory of profitability, and the resolution of internal control issues before making further investment decisions. The long-term potential is significant, but short-to-medium term execution risks and financial pressures are notable.

Keywords

Satellite Communications, Intelsat Acquisition, C-band Repurposing, GEO Satellites, MEO Satellites, IRIS2 Program, Financial Performance, Revenue Growth, Net Loss, Adjusted EBITDA, Adjusted Net Debt, Credit Rating Downgrade, Internal Controls, Cybersecurity, Regulatory Risk, Space Industry, Telecommunications, Media Distribution, Networks Services, Contingent Value Rights, Capital Expenditure, Share Buyback, Corporate Governance, Risk Management