SES S.A. (SESG) Earnings Call Transcript

Ladies and gentlemen, welcome to the SES Half Year 2026 Conference Call. [Operator Instructions] I will now hand over the conference to Christian Kern, Head of Investor Relations. Please go ahead, sir.

Thank you, Dan. Good morning, everyone, and thank you for joining us today. It is my pleasure to welcome you to SES First Half 2026 Results Call on behalf of our management team. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document have been prepared under International Financial Reporting Standards. As usual, this presentation may contain announcements that constitute forward-looking statements, which are not guarantees for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several factors. We invite you to read the detailed disclaimer on Slide 2 of this presentation. The presentation is also available on our company web page. Today, I'm joined by our CEO, Adel Al-Saleh; and our CFO, Lisa Pataki, who will take you through the presentation followed by a Q&A session. Adel, without further ado, over to you, now.

Very good. Thank you, Christian. Good morning, everyone. First half of the year performance is in line with our expectations. Although Q2 performance was softer than expected, mainly due to the timing of a couple of contract awards, the fundamentals of the business remain strong supporting our confidence in the year ahead and our reiterated 2026 financial outlook. We also showed continued progress on integration and synergy capture while maintaining disciplined execution against our long-term priorities. Let's start with Slide 3. Our vision remains clear, and we continue to deliver it. We're building a leading space solutions company, evolving beyond traditional satellite connectivity into an integrated provider of mission-critical solutions. We're delivering on our strategy and creating long-term value for our customers and shareholders by combining our multi-orbit network, extensive ground infrastructure, our software services and a broad ecosystem of partners. At the same time, we continue to invest in innovation and smart diversification. A clear example of this strategic execution is our role in the IRIS2 program. IRIS2 is Europe's secure sovereign constellation, which reflects both our commitment to innovation and smart diversification into high-value sovereign connectivity solutions. IRIS2 D Mondon negotiations are in final stages. As part of our sustained financial strength and vision is our focus on synergy delivery, where we're making excellent progress and our disciplined financial management and execution. C-band clearance incentives give us a clear path to delever, strengthening our balance sheet. Now let me share with you further -- I will share with you more details of IRIS2 and C-band clearance in the following slides. Moving to Slide #4. I'm giving you an update on IRIS2 program, Europe's Secure sovereign Constellation. IRIS2 is a strategically important program for SES and a cornerstone of Europe's future secure and sovereign space infrastructure. As the largest European government space and defense initiative to date, the program aligns strongly with our long-term strategy and through its balanced public-private partnership structure, Rouable1 negotiations are now in the final stages. SES is working very closely with the members of the Space Rights Consortium and the European Commission to validate key terms and conditions, including project costs, supply chain arrangements and technical requirements for the design, delivery and operation of the highly secure, resilient multi-orbit network. SES, along with its consortium partners, will build and operate Europe's secure space network through a constellation of LEO satellites and 18 MEO satellites delivering secure pole-to-pole coverage. The program is well underway and targeted operations will start in 2030. The IRIS2 program is complementary to our next-generation MEO steel road map, strengthening our position at the center of Europe's secure connectivity ecosystem for decades to come. Now let's move to Slide #5 to discuss the upper C-band clearance in more detail. The FCC published its report and order for the upper C-band clearance on July 24. It establishes transition deadlines of December 2030 and June 2031 for repurposing 160 megahertz of the upper C-band spectrum for wireless services in the contiguous United States. The reported order adopts a framework for the upper C-band clearing that is similar to the one we adopted for the lower C-band transition. Specifically, satellite operators will receive reimbursement for all reasonable costs to clear the 160 megahertz and to maintain sustainably the same service for its C-band customers. and total incentive payments of USD 6.3 billion, of which approximately USD 5.6 billion are allocated to SCS contingent on successful on-time spectrum clearing. Specifically, we'd have to clear the top 75 partial economic areas in COU.S. -- by December 30, 2030, and the remainder by June 30, 2031. We have developed a compelling solution that enables us to protect our C-band customers by transitioning them to a new hybrid Ku and C-band solution, augmented by terrestrial recovery network that will provide them with sustainably the same service as they enjoy today. Similar to the lower C-band clearing program, reasonable and necessary upper C-band transition costs will be reimbursable through the clearing house, meaning these costs are not expected to impact our long-term capital allocation and leaving the full amount of incentive payment as the potential economic benefit upon successful execution. In 2026, C-band-related Capex are expected to be between EUR 100 million to EUR 150 million, fully reimbursable over time. We remain fully committed to working cooperatively with the FCC and all stakeholders as the process progresses to clear the spectrum and transition our customers to equivalent services in the Ku band with a time line set by the FCC. The proposed framework significantly derisks the upper C-band program and provides SES with a clear deleveraging path by providing greater clarity on the implementation time line of 2030, 2031. The reimbursement mechanisms, the technical approaches that may be considered reasonable and the incentive payments for time to clearing. We have already begun taking steps to meet the FCC's deadlines by engaging with the satellite manufacturers to order long-term lead items. Consistent with our financial policy, C-band proceeds would first be prioritized towards deleveraging to our net leverage target of 3.0x EBITDA or below further strengthening our balance sheet. Beyond that, at least the majority of future exceptional cash flows will be prioritized for the shareholder returns, in line with the capital allocation framework we have consistently communicated. Moving to Slide #6, which gives us a brief update on the execution of the Meosphere program. Meosphere is another pillar of our long-term strategy with software-defined payloads at the heart of its differentiated architecture. Today, I'd like to give you a glimpse of our new Luxembourg Space campus facility, where we will develop and manufacture the payloads and to the assembly integration and test of the spacecraft. Operations are progressing very well with the first production hole dedicated to electronics assembly on track to be fully equipped and operational by mid-August. That's in a couple of weeks. On July 13, we successfully began production of the first printed circuit boards and box assemblies for our onboard processor unit, making an important milestone in the industrialization of these advanced technologies. We expect to begin installing critical test equipment and chambers in the second hole during August as well. This hole will house our testing and qualification capabilities, enabling us to validate and certify payloads, antennas and bus performance to the highest standards. These holes are part of our pilot line, which will be foundational to the development of the mother fab, i.e., the brand-new manufacturing facility, which is 15,000 square meters that we're building in Kukershire in the south of Luxembourg. With the development progressing smoothly, production and testing of our Pathfinder 2 payload is expected to commence in mid-September. A reminder to everybody that Pathfinder 1 is already flying in space undergoing planned in-space testing. This pilot line facility will play a central role in the development and manufacture of our innovative high-capacity payloads for Meosphere and IRIS2, while also supporting the assembly, integration and test of our next-generation satellites. By bringing these critical capabilities in-house, we are strengthening our technological leadership, building on our vertical integration strategy, accelerating innovation cycles, reducing costs and building the foundations for future growth in secure and high-performance connectivity solutions. Meosphere is targeted for operation by 2030 and designed to significantly boost our MEO network capacity. Meosphere is complementary to the IRIS2 constellation. Now let's move to Slide #8 and our first half 2026 business highlights. These results are shown on a reported basis with H1 2026 being fully consolidated with Intelsat. The figures are compared year-on-year to H1 2025 SEF stand-alone reported numbers on a constant FX basis. In a few minutes, Lisa will also share like-for-like comparisons. H1 2026 performance is in line with our expectation despite a softer-than-anticipated Q2 following a strong start in Q1. H1 2026 revenue was EUR 1.602 billion, up 72% year-on-year, driven by Networks growth of 89% year-on-year, again, on a reported basis. H1 2026 adjusted EBITDA of EUR 725 million was up 47% year-on-year with a margin of 45.2% on a reported basis. Capital expenditures for first half 2026 were EUR 444 million, with full year 2026 still expected to be front-loaded while we continue executing on planned CapEx synergies. H1 2026 adjusted free cash flow of negative EUR 130 million, reflecting the timing of the investments and supporting future growth. In H1 2026, we secured EUR 1.2 billion of renewals and new customer contracts, with the majority coming from our growth segments. This has supported our gross backlog of EUR 6.4 billion. Q2 softer-than-expected performance was driven by timing of a couple of awards. One of these awards were received very late in the quarter from our government and defense customers. And others in Government and Defense and aviation we're working to secure in the second half of the year. Aviation continued to see some timing differences between the onboarding and decommissioning of airline customers as well as lower ESA kit shipments in Q2. These were mainly driven by seasonality and are expected to ramp up in subsequent quarters. In addition, continued pressures in fixed data and ongoing structural declines in media also contributed to softness in Q2. With solid performance in Q1 and softer Q2, our overall H1 performance remained in line with our expectations. During the first half, we focused on securing commercial wins and strategic contracts that are expected to contribute to growth in the second half of the year, providing greater visibility for our performance for the remainder of 2026. Let me walk you through our second half drivers on Slide #9. We will enable our second half priorities through focused and disciplined execution across all functions. Let me start with Governance and Defense. As a reminder, U.S. government those cuts have impacted our year-on-year business first half performance and are now largely behind us. We have secured the U.S. Space Force Protected Tactical SATCOM global contract award called PTSG as a prime, which will provide incremental revenue in H2 versus H1. The award of the U.S. Space Force blanket purchase agreement further enhances the revenue opportunity pipeline. In addition to these 2 large contracts, we secured several additional contracts in Europe and the U.S. that will contribute in the second half of the year. And finally, IRIS2 Randable1 is in its final stages. Overall, we expect solid revenue in the second half of the year for our government and defense business. In mobility, in aviation, the solid commercial momentum continues, having secured around 200 in new sales in the first half of the year, which will support second half ramp. There's also one particular larger contract delayed from Q2 that we now expect to materialize in the second half of the year. We will also continue installing our growing ESAB backlog. In media, prior year Brazilian customer bankruptcy-related headwinds are now largely behind us. Several multiyear contract wins and renewals secured during H1 will support H2 performance, including contract renewals well beyond the next decade. Business remains on track with the previously expected mid-single-digit annual decline for the full year, implying a stronger second half performance. In Fixed Data, market conditions remain challenging despite restructuring actions we have taken. We are successfully retaining key customers, maintaining a disciplined focus on customers and segments, which building a bridge towards future capabilities. In the near term, we do not currently anticipate a significant change in the trends. I'm pleased to confirm that we continue delivering on our synergies planned in the first half of the year, achieving a reduction of 16% year-on-year in staff costs and overall OpEx was down 9% year-on-year, with synergy delivery expected to produce further results through second half of the year. With this backdrop, we reiterate our full year 2026 outlook supported by stronger second half revenue profile and continued cost discipline. Let us now turn to Slide #10 and our key customer renewals and strategic wins throughout the first half of the year. I mentioned a few of them already, but let's start with media. Satellite remains the most efficient and reliable platform for large-scale content distribution. During the first half of 2026, we secured several important contract renewals, including the extension of our long-standing relationship with ARD beyond the next decade and a new multiyear agreement with ABP network covering India and South Asia. We also renewed an important direct-to-home agreement in India with DISH TV, extending direct-to-home contracts with Sky Mexico and concluded important extensions in the U.S. for domestic and global distribution with some of the largest U.S. broadcasters. Overall, these key contract renewals are not only supporting second half performance and long-term visibility of our media business, but also reinforcing the continued value of satellite for premium content distribution. I'm also proud to announce that SES enabled live coverage of the Open Championship, a Royal Birddale distributing IMG's Golf World feed to more than 50 broadcasters across Europe, Americas and Asia. In Government and Defense, demand for secure, resilient and mission-critical communications continue to underpin performance. This was demonstrated by the selection of SES Space & Defense, the prime mission execution for the U.S. Space Force PTSG program, as I described earlier, and secured an award under the U.S. Space SST 5-year BPA for managed Ku-band satellites, which encompassing FlexMove, Flex Government Secure and FlexAir solutions. So this is overall encompassing with all of our capabilities. These wins demonstrate the increasing relevance of our solution and our trusted position with sovereign governments and defense customers. In aviation, commercial momentum remains strong as we expanded our footprint with both existing and new airline customers having added around 200 new aircraft to our pipeline. During the first year, we added Viva, Avianca and LATAM Airlines to our served aircraft portfolio, further validating the attractiveness of our multi-orbit electronically steered antenna solution and reinforcing our position as a leading in-flight connectivity provider serving millions of passengers around the world. In Maritime, performance was in line with expectation as we continue to execute the restructuring of our wholesale business while navigating the anticipated competitive headwinds. We remain a leading provider of maritime connectivity and during the first half of the year, secured important renewals, including Ottavio Global, demonstrating the continued value of our services and the strength of our long-standing customer relationships. In Fixed Data, we continue to execute our transformation program we described in the beginning of the year while navigating the anticipated market headwinds. We remain focused on serving high-value enterprise network and global energy customers by leveraging our global infrastructure and differentiating multi-orbit capability, bridging towards future network capabilities. Throughout H1, we signed important strategic partnerships that will drive future revenue streams, for example, with Sharp in Japan and TIM in Brazil. With this, I'm going to hand over to Lisa to discuss further details of our H1 2026 financial performance.

Thank you, Adel. Good morning, everyone. Before I turn to our first half 2026 financial performance, I'd like to remind you that the press release available on our company website includes supplementary financial information with like-for-like revenue per vertical and adjusted EBITDA at the group level as if the Intelsat transaction had consolidated from the 1st of January 2024. As always, our IR team remains available to address any questions you might have. Let us now turn to Slide 12 for our financial highlights. In the first half of 2026, the company reported revenue of EUR 1.602 billion, resulting in a growth rate of 72.4% on a reported basis compared to the same period last year. On a like-for-like basis, with constant foreign exchange rates, first half 2026 revenue was down 5% compared to the first half of 2025. This outcome was largely as expected with some softness in Q2, as Adel mentioned, driven by the timing of awards won in our Government and Defense business, which was received late in the quarter and a couple of others in government, aviation and media that we still expect and will contribute to growth in the second half. Mobility remained a key source of strength in the first half. Aviation performance benefited from the favorable contract restructuring in Q1, which will improve network utilization and support future commercial momentum as previously reported. This is partially offset, as we expected, by timing differences between the onboarding and decommissioning of airline customers as well as lower ESA shipments. As we look to the second half, we expect ESA shipments to increase each quarter. And importantly, we continue to secure new wins, adding about 200 sales in the first half. In Government & Defense, as previously discussed, the first half comparison to prior year was impacted by the effects of dose-related reductions on the U.S. government business, which were implemented in the first half of 2025. Global Government and Defense delivered a solid first half. We continue to see demand for our secure space-based solutions supported by several strategic awards, driven by increasing defense budgets in both the U.S. and in Europe. Within Fixed Data and Media, performance was broadly in line with our expectations. Both businesses continued to experience volume declines during the first half. Media was still impacted by the Brazilian customer bankruptcy in the first half when compared to the prior year, while broader industry dynamics remain consistent with our expectations. Trends are expected to improve in the second half on the back of major contract renewals. Adjusted EBITDA in the first half of 2026 was EUR 725 million, showing growth of 47% year-over-year on a reported basis with a margin of 45.2%. On a like-for-like basis, first half 2026 adjusted EBITDA was down 6.2% compared to the same period in 2025. This included the favorable contract restructuring in aviation in Q1 2026 and lower operating expenses resulting from our integration activities. These partially offset the following underlying headwinds. In Aviation, the prior year included a contract modification from Intelsat legacy in Q2 2025, making it a difficult comparison in Q2. Additionally, as previously discussed, there continues to be some timing differences between the onboarding and decommissioning of airline customers. In Government & Defense, margin compared to prior year was impacted by timing impacts due to contract rationalization in the U.S. government business, primarily driven by those reductions as previously discussed. We expect solid growth in the back half of the year, supported by several recent awards as well as a strategically important award for Protected Tactical SATCOM Global or PTSG. In addition, as mentioned, IRIS2 [indiscernible] is making progress. As we have discussed before, mix continues to impact the overall company margin, driven by declines in the media and fixed data verticals. With both businesses having been subject to market-specific headwinds, we are seeing early signs of stabilization in media and expect a more favorable trajectory in the second half. Importantly, our synergy realization remained solid in the first half and helps mitigate the impact of business mix. We delivered a 9% reduction in total operating expenses with a 16% reduction in staff costs. Looking ahead to the second half, we expect growth in both revenue and earnings, driven in large part by our government and defense business, both from recent U.S. and European awards. Our media business is expected to improve year-over-year in the second half with recent awards after quarter close contributing to the improvement. In Aviation, we expect stronger ESA shipments in the second half and additional awards to drive both revenue and earnings. With clear visibility into the second half growth pipeline, we are reaffirming our full year 2026 financial outlook. Moving now to Slide 13 to give a more detailed view on the financial performance of our vertical segments. Media's first half 2026 revenue of EUR 571 million, accounting for 36% of total revenues increased by 46.5% versus prior year on a reported basis, offsetting structural declines. On a like-for-like basis, media was down 10% year-over-year, reflecting ongoing structural declines due to capacity optimization in mature markets and the Q1 impact of the Brazilian customer bankruptcy. Despite these pressures, media remains a highly profitable and cash-generative business. Commercial momentum remains solid with approximately EUR 402 million of renewals and new business secured during the first half, contributing to a backlog of EUR 2.9 billion and providing strong long-term revenue visibility. We continue to see resilience in key segments such as free-to-air, free-to-view and sports and events, while recent long-term renewals, including the extension with ARD through 2039, and expanded long-standing partnership with Caracol Television and a multiyear agreement with ADP Network reinforce the strength of our customer relationships and the enduring value of satellite distribution. Looking ahead, we expect a more favorable trend in the second half as the impact of the Brazilian customer bankruptcy eases and recent commercial awards drive improved performance. With a book-to-bill above 1.0 in Q2, we are off to a good start to the second half. Moving to Slide 14 and the Networks business. Networks first half 2026 revenue of EUR 1.018 billion, representing 64% of total revenues were up 89% on a reported basis compared to the prior year. On a like-for-like basis, Networks revenue decreased by 1.5% versus the prior year with growth momentum in Mobility and Government and Defense, partially offsetting fixed data declines. In Mobility, we saw first half revenues of EUR 421 million, 169.9% higher on a reported basis and up 5.1% on a like-for-like basis year-over-year. This growth was driven by Aviation, including the favorable contract restructuring in Q1. As I mentioned, we continue to secure new customers and expect a strong second half with significant ramp in ESAB deliveries. Government & Defense first half '26 revenues of EUR 381 million were up 41.9% year-over-year on a reported basis. On a like-for-like basis, Government and Defense grew 1.9% year-over-year, driven by strong demand in global government, particularly in Europe, partially offset by year-over-year impacts to the U.S. government business resulting from those reductions, which materialized after the first half of 2025 and the timing of U.S. government contract awards. We expect recent awards to contribute to growth in the second half of the year, including PCSG. And additionally, we expect several new awards like IRIS2. As we discussed, the IRIS2 [indiscernible] is progressing well and nearing completion. As I mentioned, demand for secure and sovereign connectivity across Europe remains strong. driven by increasing geopolitical priorities and government investments in resilient communications infrastructure. Lastly, in our fixed data business, revenues in the first half 2026 totaled EUR 216 million. This represented a growth of 89.3% year-over-year on a reported basis. On a like-for-like basis, revenues declined 16.6% given the competitive headwinds in this business. In the first half, we continue to see commercial momentum from our Network segment, driven by continued demand for space-based solutions with a gross backlog of EUR 3.5 billion, underpinned by EUR 825 million of new business and renewals in our Networks segment. Importantly, backlog has grown by EUR 200 million since the end of the first quarter from EUR 3.3 billion to EUR 3.5 billion, which provides confidence in the ramp we expect in the back half of the year. Turning now to Slide 15 for a detailed view of our capital allocation priorities and our debt maturity profile as of June 30, 2026. Our combined like-for-like adjusted net debt to adjusted EBITDA ratio stands at 4.4x versus 4.1x in the previous quarter, reflecting mainly timing effects of cash flows and lower 12-month trailing adjusted EBITDA. The net leverage ratio includes cash and cash equivalents of EUR 703 million, excluding EUR 215 million of restricted cash, which is related to the SES-led consortiums involvement in the IRIS2 program. We continue to benefit from a debt profile with a weighted average cost of around 4.2%, approximately 72% of debt at fixed interest rates and an average maturity of roughly 5 years. This structure provides strong protection against market volatility, supports financial flexibility and enhances visibility over our funding requirements. Our capital allocation framework remains disciplined and unchanged. We are focused on reducing leverage and strengthening credit metrics over time. while preserving ample liquidity and maintaining flexibility to address future financing needs as they arise. During the period, we continued to proactively manage our debt maturity profile. In the first half of 2026, we repaid approximately $1.2 billion of debt principal, including our EUR 650 million senior bond and $525 million of deeply subordinated securities. This included approximately EUR 208 million repaid in the second quarter, largely related to the call of our perpetual NC26 hybrid bond, which took place on May 27, 2026. These actions, together with our continued access to diversified funding sources, position us to address upcoming maturities, pursue refinancing opportunities when attractive and support the execution of our strategic objectives. Consistent with what we have previously communicated and our disciplined capital allocation framework, the usage of the net proceeds post CBR payments related to the C-band report in order will first be directed towards further deleveraging with the objective of reducing net leverage to 3.0x or below. As previously stated, once the company meets its net leverage target, at least a majority of future exceptional cash flows will be prioritized for shareholder returns. Now turning to our cash flow performance in the first half. SES generated positive adjusted net operating cash flows of EUR 522 million, excluding EUR 186 million of payments in connection with the IRIS2d restricted cash and EUR 30 million related to restructuring and outflows associated with the implementation of mergers and acquisitions. This represents an increase of EUR 42 million compared to the same period last year. Adjusted free cash for the first half was negative EUR 130 million, reflecting the timing of capital expenditures primarily related to our mPOWER satellites expected to launch in Q3 as well as the timing of collections. It is worth specifically noting that shortly after the close of Q2, the company received EUR 205 million as an upfront payment from a global government customer. In the first half, capital expenditures totaled EUR 444 million. And as a reminder, our CapEx profile for the year is front-end loaded due to the timing of cash flows for our mPOWER satellites, as previously mentioned. We continue to execute our CapEx plans with discipline. As you will recall, in Q1, we canceled 2 GEO satellites that did not meet our IRR thresholds. We remain aligned with our CapEx outlook of around EUR 700 million for the year, excluding C-band. C-band-related CapEx for 2026 is expected to be around EUR 100 million to EUR 150 million. And as mentioned previously, it is important to note that C-band CapEx is reimbursable over time. We are disciplined with regards to our investments to drive strategic growth in the business while continuing to deliver on planned CapEx synergies and fleet and ground infrastructure optimization. In addition, we continue to make progress in our O3b mPower insurance claim, having collected USD 15 million equal to roughly EUR 13 million this quarter, bringing the total proceeds to USD 218 million to date. As SES evolves from a traditional satellite operator to a space solutions company, we are increasingly delivering integrated networks, services and end-to-end solutions that expand our addressable market and create long-term revenue opportunities. This transition is driving a change in our revenue mix with a greater proportion of development, integration and equipment-related revenues in the initial phases of customer programs. While these activities typically carry lower margins upfront, they establish the foundation for recurring higher-quality service revenues over the life of the contracts. We remain focused on executing our verticalization strategy, capturing integration synergies and allocating capital in a disciplined manner to support sustainable long-term growth, profitability and cash generation. I'd like to thank our employees and partners for all of their hard work in the first half and continued dedication to meet our financial goals for the year. With that, I'll hand it back over to Adel for his closing remarks.

Great. Thank you, Lisa. Let's go to Slide 17. We're confidently reiterating our full year financial outlook for 2026. Performance in the first half reflects a strong Q1 and a softer-than-expected Q2. As mentioned in previous results call, we had expected to see some quarterly variation driven by well-understood dynamics. Importantly, the key drivers underpinning our outlook remain firmly in place, and we expect a stronger second half of the year, supported by continued commercial momentum across mobility and government and Defense with important contracts secured in H1 and the contribution from new customer deployments ramping through the remainder of the year. Media declines are expected to improve as we'll no longer have the Brazilian customer bankruptcy headwinds and are anticipating meaningful long-term contract renewals. We continue to execute with discipline across the business. Integration and efficiency initiatives remain on track and we continue to deliver our synergy objectives while maintaining a strong focus on operational execution and customer service. As such, we reiterate our full year 2026 outlook of stable revenue and stable adjusted EBITDA year-on-year. At the same time, capital expenditure remains well controlled and aligned with our strategic priorities, supporting the future growth while preserving financial discipline. Hence, we reiterate our 2026 capital expenditure forecast of around $700 million, including IRIS2 and the first stage of Meosphere at euro-U.S. dollar exchange rate of $1.20. We continue building our capacity and expect O3b mPOWER satellites 11, 12 and 13 to launch in Q3 2026. I'd like to conclude today's presentation with Slide 18. Our priorities remain clear: disciplined execution, operational excellence and long-term value creation. Looking ahead, we remain confident in a strong operational delivery in the second half of the year, supported by continued commercial momentum. Our focus remains firmly on execution, delivering our synergy targets, maintaining capital expenditure discipline and positioning the company for sustainable growth. As I mentioned earlier, FCC's report and order for 160 megahertz C-band clearing in the U.S. provides us with a clear path to deleveraging and sustained financial strength. IRIS2 is a landmark European secure connectivity program and is highly complementary with our meosphere initiative. Together, with the launch of the last O3b mPOWER satellites expected in 3Q 2026, these investments represent a step change in capability and reinforce our innovation and verticalization strategy. Finally, we're pleased to announce that SES will host a Capital Markets Day in Luxembourg on December 9, 2026. This will be a unique opportunity to take you on our transformational journey to space-based solutions company. showcase the increasing innovation and verticalization of our technology value chain and share our road map for sustainable growth and shareholder returns. We remain confident in our future, focused on execution and highly committed to delivering value to our customers and our shareholders. With this, we're ready for your questions.

[Operator Instructions] The first question is coming from Akin Dasani from JPMorgan.

My first question is just to better understand the phasing of the H2 growth that you're alluding to. Adel, as you mentioned, Q1 was better than expected, Q2 was softer. But I guess that volatility maybe makes it a little bit difficult for us to understand how to think about the shape of H2. So could you maybe help us understand when we think about the mid-single-digit revenue and EBITDA growth you need to achieve in H2, how should we think about the phasing of that Q3 to Q4? Is it more back-end loaded, front-end loaded? What are the key puts and takes just to help us more concretely understand on numbers where we should come out? So that's the first question. And the second question was on the C-band process. Your comments are very helpful in terms of helping us understand prioritization of deleveraging and then capital return. But I guess the challenge is the capital from this is not likely to come to SES for another 5 years. So there's quite some time before we have visibility on that actual money coming in and then obviously you utilizing that capital in the ways that you've committed to. And I guess at the same time, the industry has maybe had a bit of a checkered history around utilization of capital and pivot into M&A. So I wondered if you could maybe help us understand what you can do to give us more concrete visibility around that capital. Is there anything you can do to commit earlier and do something that would give us, let's say, more visibility rather than having to wait the full 5 years before we know exactly what ends up happening.

Okay. Very good. Thank you for the two questions. Let me tackle the first one, and then we'll go to the C-band conversation. Look, you've been following us for a long time, right? We do have this seasonality in our quarters, right? And they are driven by contracts that we sign renewals that we do. And the contracts, we have variation of contracts, right? There are contracts that yield revenue almost immediately when we sign them because customers pay us upfront and we have milestones upfront. And there are contracts that take time, right? I mean we sign up to a contract, we deliver certain milestones. It takes a little bit of time. And then we have a milestone where we get paid and we can recognize the revenue and the profit associated with it. So this is what makes our quarters a little bit seasonal, right, when you think about it. Now the way you should think about second half is the big ramp driven by a couple of defense contracts will happen in fourth quarter. right? So fourth quarter will be a bigger quarter than Q3. We know that. We already know that. We mentioned the contracts. PTSG, we keep talking about it. And PTSG was 0 first half of the year. It's going to be a significant number for us in the second half of the year. And it will ramp gradually in Q3 and then really go through a big boost in the fourth quarter because of the milestones that we have, which we are very confident in. But the same thing with IRIS2, right? As we conclude Bone 1, which we anticipate to happen quite quickly, we're very happy, by the way, with the progress with the Commission and the European Space Agency. It's been a while, right, as we've been working on it. And the reason it took a while is we took our time. We were very diligent, us and our partners, the European Commission, the European Space Agency. We're all committed to do it, but we needed the time to make sure that the terms are right, that the costs are spread correctly, that the contributions from the private sector and the public sector are balanced correctly. And now it's going to ramp. So all the revenues that you've seen were more preparations for this point in time, and it's going to start ramping because we're going to start delivering the project milestones that we're staffed to do and ready to go, right? So think about it like that, right? Q3 will be a good quarter, but the Q4 is going to be where we expect the ramp to have. So I hope that's helpful in how you should think about that. There is a big contract, we mentioned it already in Aero that we're not going to rush, right? And then one thing about SES, we don't rush out contracts, and I don't want to be disrespectable to the community that's on the phone, just to make a quarter, right? We let them fall where they need to fall as long as we get what we need to get in order to be comfortable with the value and the quality of the contract. So that contract that I'm talking about could skew either Q3 or it could skew Q4 even further, right? So just a heads up for that one. Now look, on the C-band, so a couple of things. So first of all, look, this is a really good outcome. We have worked very closely with the FCC. I mean I am impressed with the speed at which FCC really worked through this. I mean everybody was expecting this report in order to be sometime in fourth quarter. The speed, the determination, the focus that FCC put in it and they're very balanced approach. I mean they understood what they needed to do in terms of creating value in the U.S., but they understood we were a key stakeholder that we needed to partner with them to make it happen. So we are satisfied both with the number -- with the incentive numbers, with the scheme of reimbursement. It has improved versus last time. And we expect the speed to continue to be better than where it was in the first clearing. But it's not 5 years, it's 4 years, right? 2030 is 4 years from now, right? If you count that we're at the end of 2026 already. Our confidence is high, Akhil, in being able to meet the deadlines. And I want to be also clear that the targets that FCC set were targets that we worked with them on, right? It wasn't kind of unilateral or independent assessment. We work together with FCC and other stakeholders to figure out what's the most logical way to do this. And there are opportunities to accelerate. But I think it's too early, Akhil right now to declare those. I let the project run. We're going to set up the clearinghouse by the end of the year. The auction with the mobile operators used to happen in the first half of 2027. Let those milestones progress. And then we'll see, right, whether we can -- we're able to do. Now one thing we did do very quickly, right, as soon as the reported order came out is contract the manufacturing of the satellites. We have to launch 7 new satellites in order to be able to do the clearing, and that is the longest lead item in the whole transition, right? So we contracted immediately in order to make sure that we've got the long lead items locked up that we have -- we selected the manufacturer we're negotiating very aggressively for months before that and waited for the report and order before we go ahead and contractually go for it. So we are very happy with that, right? And we've got very strong partners who know how to do these satellites, who have done it before. We selected technologies that are existing technologies rather than something that needs to be invented. And that gives us a lot of confidence, right? And the last item I want to say here on expense reimbursement, I mean, the FCC made it very clear in the report and order, they want to minimize interest expense. Minimizing interest expense means you have to accelerate the clearing house approvals for expenses. That's what it means. That's what that language says, right? So the clearinghouse has a clear instructions from the FCC that the process needs to be a lot more efficient, and that will minimize our need to go ahead and get financing for those expenses and be able to claim them faster and optimize our balance sheet going forward. And look, our experience from the last clearing, we've got -- I don't remember the exact number, but we got the vast majority of the expenses we needed to claim. There were no expenses that were less stranded for us, and we expect the same thing to happen this year. So Akhil, I hope I went a little long here, but I hope that was insightful and I answered your questions.

No, it was extremely useful. I mean just one very quick clarification. I mean it's maybe a bit early to comment on this, but I guess just to see if there's any thoughts you have around it. Could there ever be value or a rationale for maybe collateralizing the incentive payments that you're due to receive -- because obviously, it's a very large number relative to the value of the group. There's obviously a huge amount of value being created here. Could that make sense to pull forward access or use of that capital?

Only if it makes financial benefit to our company and our shareholders. So again, too early to declare. But if we can find a way where we can accelerate it and have a net benefit for the company, we will explore it for sure. But let us get through the first milestones first, right, which are very critical for the next 6 months, the next 9 months, which is what we need to focus on.

The next question is coming from Aleksander Peterc from Bernstein.

I just have a few. So the first one, again, on C-band. Could you just help us understand if you're actually working actively on an accelerated clearance that would move the proceeds a little bit to the left or in your favor? Is that something that is being worked on actively with everyone at all protagonists -- and could you see also any sweeteners from operators? Is that something that you envisage same thing as you had, I think, with Verizon in lower C-band if you do a bespoke fast clearance? That will be my first question. And the second one on Iris2. How close are we to run one? Is this a third quarter event? Or could it drag on a bit? And if you could help us understand to what extent that will drive your H2 balance as well that you are modeling currently?

Thank you, Alex. Look, on the C-band, we absolutely want to clear it as quick as possible. It's to our event, right? There is no incentive for us to be later. So we are -- I mean, we're supposed to submit the whole transition plan to FCC by the end of the year, which we will. And part of that is trying to go as fast as we can. As I said, answering Akhil, the longest lead item is always the satellite, right? So we now have them now contracted. We've got the teams running very hard. We've got three partners that are working on the satellite. So we spread it in order to spread the risk, right, and make sure we have a little bit of competition. We have incentive for early delivery of these satellites that we have agreed with our partners. And like I said, we selected prudently selected technologies that we have high confidence in and not something that needs to be invented or new space, if you will. So yes, the answer to the first question, we absolutely want to do it as fast as possible, and we will do everything we can to accelerate that. Second part of the first question, will the operators and mobile operators want to accelerate and sweeten some of the incentives, et cetera? Too early to tell. I mean I know that just talking to AT&T, Verizon, T-Mobile and understanding their public plans around 5G and 6G deployments, this is a very valuable spectrum, right? They all want to accelerate their deployments. There's a lot of important economic growth associated with the spectrum for the U.S., which is why FCC started this the full process. So we don't know yet, and we don't have anything specific from them, but we're open. So if they listen to these transcripts, we're open to the conversation. But let's see, Alex, like I said to Akhil, let's just -- let's not get ahead of ourselves, right? I mean the objective and the alignment of interest are very clear. We want to do it faster, as fast as we can. The deadlines that FCC has set are reasonable and agreed with us. It's not something that was forced on us. It's something that we work very closely with FCC to come up with these deadlines. And it's in everybody's interest to get it done as quick as we can. So let's leave it at that. No, Alex, we're very, very close. I mean -- and you should be able to gauge this with my comments. I mean when we did the first quarter announcement, we were in the midst of these difficult terms and conditions negotiations, and I was very cautious about declaring victory or signaling that it's closed. I am very optimistic, right? I mean the commission did an incredible job in keeping the focus working. I don't know if you've all seen it, but Poland came into IRIS2. I mean that's a big deal, right? Poland, I think it's public, right, how much money they put in. They decided to put in EUR 430 million towards Nos in the program, right? And the commission signed that agreement with Poland, and we signed our MOU with Poland that goes beyond IRIS2 and collaborating together around building space capabilities for Poland. So we are very, very close. We are not weeks away. We are days away. Right, Alex. So let me leave it at that way before I set the commission because they are the customer and they are the ones who decide when to announce things. But we are very optimistic and supportive of this program.

That's great. Can I just have a very quick follow-up on launches. We hear that SpaceX is retiring Falcon 9 in favor of Starship and will progressively retire it. What does this mean for your launch plans and for the industry at large? Is there any disturbance in the process that you anticipate? Or is it going to be smooth?

Alex, look, we all got spoiled, to be honest with you, over the last few years having this reliable vehicle to access space, right? So we've all benefited and you all remember that SES was the first commercial operator to be on a Falcon 9, and we were the first commercial operator to be on a reusable Falcon 9. So we have a deep partnership with SpaceX and so on. So we're watching this very carefully. We don't know -- we don't have any specifics yet on what the plans are. But we've secured the required launches that we need both for the C-band satellites, the C-band clearing, that's secure. We also secured the early stages for IRIS2 and for our Meosphere launches. The industry needs to evolve quickly. We need -- in addition to SpaceX that has helped the entire industry over the last 5 years, we need others to increase their cadence. So we're working with [indiscernible]. They are a very good partner. There are others who are coming to market. So I think the launch market is going to see an incredible evolution over the next 5 years. And we'll see how Starship goes, and we're all eager also to be customers of Starship. So let's see how that evolves. But I'm not worried about the launch capabilities, but it is not as straightforward, if you will, as it was before. You got to work on it, you got to secure it. You got to have the balance sheet to be able to get it locked up, and we're in a fortunate position to have that. So that's how we see it.

The next question is coming from Paul Sidney from Joh Berenberg.

Just 2, please. Just going back to the first question we had on the call, the rebound in H2. I was just wondering, is this revenue already contracted? Or does it rely on contracts being signed over the next few weeks and months? And I'm guessing the answer to this question is no. But is it possible to break down the elements that you've picked out that will boost H2 in monetary terms? Can you give us a feel for the euro amounts for the PTSG contracts, for example? And just secondly, a real big picture question. Post SpaceX IPO and the additional disclosure that we've got on the company, has anything surprised you in terms of addressable markets or SpaceX's capability? Just anything that struck you from the additional disclosure we've got on SpaceX would be really helpful.

Thank you, Paul. So on the -- we tried in my section of the presentation and give you -- and Lisa as well reinforced it, what are the drivers of H2. So we will not give you an individual line item, right? That would make sense. But if you think about how much of it is contracted and how much of it is to be contracted, majority of it is already contracted, right? So things like PTG as an example, the reason we keep bringing that up is because it's a significant contract ramp-up in the second half of the year and other government and defense contracts, these are all done. right? And like I said, we have -- and in the Capital Markets Day, we'll go much deeper in explaining the profile of the company going forward, right? And I tried to explain that we have various contract structures that some will recognize revenue really quickly, some require milestones to get there. Some are existing and continuing delivery of the complex. So majority of the contracts for the second half are contracted. But there are a couple of swingers that sit in there, like the Aero contract that I kept talking about IRIS2. IRIS2 is as soon as the contract is signed, it is going to generate the next milestones and the next work that we need to deliver before the end of the year. So majority are contracted. There are a few that need to close. And media, by the way, done a great job of all renewals. So they're pretty much done, right, in terms of what needs to happen for the second half of the year. That's why we feel pretty good about media business getting to the profile that we keep talking about, which is mid-single-digit decline kind of a business, which means second half will be stronger, right, than what you've seen in the first half. Look, in terms of SpaceX disclosure, I wouldn't say there were a lot of surprises for us, whether it's in their V3 constellation for Starlink or their launch strategy and what they want to do. Clearly, we don't have as much interaction with them on AI and what they're trying to do with AI and so on. So that was learning for all of us in the industry. But Starlink and SpaceX is quite focused on providing this incredible broadband capability for the customer base that we are all serving already. So no, there wasn't new revelations for us. But we wish them success in certain areas because we are huge partners in those areas. And we watch them very carefully in others because they're a very strong competitor. And we are very -- despite all these disclosures, we are very confident in what we're building, a multi-orbit solutions company and not pivoting ourselves to go against Starlink in LEO capabilities that is not an easy battle to win, right? So we were very comfortable that the strategy that was disclosed still reinforces our confidence in our strategy as we go forward. I hope that's helpful, Paul.

The next question is coming from Roshan Ranjit from Deutsche Bank.