Over the past few years the global satellite industry has been under increasing pressure as structural changes have started to appear and are now beginning to take hold. The combination of disruptive technologies, increasing competition, lower barriers to entry and changing consumer demand profiles are unsettling the historically monopoly-like environments that global satellite operators had once enjoyed. For current investors, this means greater uncertainty around business models and thus earnings profiles – changes which have resulted in significantly increased share price volatility and higher equity risk premia. Our Focus List has historically included two global companies operating in the Satellite industry, namely Eutelsat Communications SA (ETL) and SES SA (SESG). However, the above mentioned changes have altered the strength of their strategic positions – placing into question their suitability going forward.
Whilst we have not invested in the industry since 2015, we have continued to monitor the relevant companies very closely. A significant proportion of the value of the companies remained in the legacy contracts on their satellite assets, which meant that revenues still remained fairly predictable in nature. However, as time has moved on, the state of the current satellite industry has been reassessed in detail and our conclusions are shared in this paper for the benefit of both our clients and the wider investment community. In particular, this paper explores the infrastructure characteristics of the listed satellite operators, examines the investability of the satellite industry and whether these companies still meet the required core infrastructure thresholds for our Focus List.
How to invest in
Global listed infrastructure
- Targeting companies with stable, inflation-linked cashflows that grow over time
- Integrating ESG and sustainability factors throughout the investment process
- Experienced team including co-founders who have worked together for more than 17 years
We use a tight definition of infrastructure assets with low-volatility cashflows and inflation protection to achieve diversification benefits with other asset classes, such as global equities.
How to invest in
Global listed infrastructure
- Targeting companies with stable, inflation-linked cashflows that grow over time
- Integrating ESG and sustainability factors throughout the investment process
- Experienced team including co-founders who have worked together for more than 17 years
We use a tight definition of infrastructure assets with low-volatility cashflows and inflation protection to achieve diversification benefits with other asset classes, such as global equities.
