Adel Al-Saleh on Why Combining SES and Intelsat Fuels the Operator to Scale Up

Shortly after taking the helm as CEO of SES, Adel Al-Saleh made the splash move to acquire Intelsat in a stunning piece of industry consolidation. It has echoes of when Eva Berneke became CEO of Eutelsat and within a short period of time announced a deal to acquire OneWeb.

The satellite industry has entered a new era of fierce competition in markets such as government, telecoms, aviation, and cruise. If the deal goes through, SES will have an enviable collection of Geostationary (GEO) and Medium-Earth Orbit (MEO) assets going forward as it looks to grow its business in the second half of the decade. The question is whether combining two satellites giants will be the catalyst to jump-start a new era for one of the most well-known names in satellite.

In this wide-ranging interview with Via Satellite, Al-Saleh talks about his first year at SES and why he believes the two operators need to combine to have the fuel to scale and compete on a global scale.

VIA SATELLITE: You are approaching a year at the helm of SES as CEO. What have been your big learnings in this relatively short timeframe?

Al-Saleh: Firstly, it is an incredible, dynamic industry that is moving very fast and the level of innovation I have witnessed is impressive. Secondly, there is a lot of money that is being poured into it, especially for new space. Last but not least, there is pressure on existing players to reinvent themselves and reshape their business models. It is an industry that is both exciting and offers big opportunities but can be challenging for players that are not prepared to change. I see it as a huge opportunity for SES to adapt, evolve, and reinvent to achieve growth.

VIA SATELLITE: Do you believe the only way for operators like SES to survive and thrive in the future is to be multi-orbit? Is this the only way now?

Al-Saleh: Multi-orbit is a critical success factor for SES but it’s not the only thing operators need to do. The question is what you want your company to be. What kind of things do you want to be doing? There are still plenty of opportunities for GEO providers. For example, some of the regional GEO players provide unique services and capabilities that are valued and will continue to be valued in the foreseeable future. Every country wants some level of sovereignty in terms of their satellite capacity. However, it is clear that the increasing demand for connectivity necessitates flexible solutions and a variety of elements for success. I am a big believer that no single orbit or provider can accomplish everything.

I grew up in the IT industry and we always had big and successful players. But we always understood that no single provider can offer everything. You can’t get everything from Microsoft or from Google or from AWS or Accenture. You need to have a diverse portfolio of solutions to fulfil the demands of your applications, your users, and the various tasks you undertake.

At SES, multi-orbit is part of our strategy. We bring capabilities with the GEO and MEO assets we own but also complement some solutions with LEOs. We don’t own LEOs but we would partner with LEO satellite operators. We use LEO assets when needed. Multi-orbit is not the absolute requirement for success, but for us, it is a strategic component of who we are and how we want to drive the company forward.

VIA SATELLITE: Do you believe the concept of a ‘standalone GEO player’ is now the equivalent of a Blockbuster video store — consigned to history?

Al-Saleh: That is a very tough description, although there are valid comparisons. If a GEO player does not have a unique application they are fulfilling and is not self-sustaining over the mid-to-long-term, then ‘Yes,’ they are in danger of becoming obsolete. If a standalone GEO player has a unique offering for GEO-specific applications, there is a good chance for them to survive. But it doesn’t mean they can stand still. They have to bring new innovations and continuously develop services for their customers. It is a tough way to survive, but it is possible.

It is not the path SES has taken. Our path is one of multi-orbit networks. When the Intelsat transaction is approved, we will be in a position where we have latest software-defined GEO satellites and a robust MEO constellation.

VIA SATELLITE: Starlink continues to sign a number of marquee deals – John Deere in agriculture, and United Airlines and Air France in aviation. How difficult is it to compete against this low-cost standalone LEO system that seems to be taking more and more business away from traditional players?

Al-Saleh: Starlink has built an incredible capability and it is not easy to compete against them. When Starlink wins commercial deals, it is being amplified. We have a problem in the market because people are completely enamored and blinded by the perception that Starlink has taken everything. It is not true that Starlink is winning everything.

SES’s Open Orbits partner has just won two big airlines – Thai and Turkish Airlines, with more coming up in the next few months. We are also serving 100 ocean cruise liners and have continued to compete and win business, even as Starlink has also been very successful in this market. Unfortunately, these successes are not talked about as much.

There is a big part of the market that wants simple, standard solutions and that is an area where Starlink is suited to win, and they are winning very well. Yet there are other parts of the market that can use multi-orbit solutions. Cruise is a good example. Airlines will be the same. There will be a percentage of airlines that will say they will just go single orbit. But there will also be others that find alternatives to LEO compelling. Ultimately, our customers benefit from having choices both of providers and orbits. That is why Airbus and Boeing have been looking at linefit installations of multi-orbit and multi-band antennas. Their customers are asking for options. I am convinced that the market is big and vibrant enough for multiple players.

Thanks to Starlink and the work they have done with John Deere, we received plenty of inbounds from agriculture companies, equipment manufacturers wanting to explore solutions. We have had farmers asking about how they can get real-time information on the moisture of the soil. They want indicators on when the best time to harvest is. They want the best indicators on when they go and plant their seeds. All of these information is also made possible thanks to analysis and real-time information sent through satellite.

In the past, we were sitting around waiting for customers to come and talk to us. Starlink has opened up new applications and disrupted the market, leading to healthy competition and spurring the industry into action.

VIA SATELLITE: What do you see as the top three major growth verticals for SES?

Al-Saleh: Government — both military and civil — continues to be very strong for us. Our government business is growing in high single-digits so far this year. We see consistent demand coming from both U.S. and governments around the world. One good example is the European Commission, which just made a decision on IRIS². They want to build their own constellation.

The next one is aviation. We are getting a lot of traction with Open Orbits – a network created alongside with our regional satellite partners such as Neo Space Group to deliver connectivity to airlines around the world. Unlike before, the airlines want to talk to operators to understand our future solutions and how they can count on us for the next 20 years.

I would also say cruise continues to be a really buoyant segment in terms of connectivity on ships. It is mind boggling. Cruise companies want an increasing amount of capacity. Some of these ships are using both Starlink and SES connectivity services. We have seen double-digit growth on our part, and likewise, demand for Starlink is also growing, yet they are still asking us for more. Cruise companies are now asking us for help with quality of experience. They want us to help them understand connectivity usage patterns of their cruise passengers so they can match the level of connectivity accordingly, delivering an enhanced guest experience for their passengers.

There are a couple of other segments like telco and energy that are growing really fast, because our second-generation robust MEO constellation – O3b mPOWER – is ideal for trunking and mobile backhaul. Energy is beginning to get a lot of traction as seen in our sales pipeline.

VIA SATELLITE: Starlink has announced a lot of cruise deals with your partners, which raised questions about your cruise business. So SES’s cruise business is still growing despite Starlink’s inroads here?

Al-Saleh: Many cruise lines use both of us. They want guaranteed service. They want it in the middle of the ocean, in ports, in congested areas, and that is not easy for one provider to always guarantee for 100 cruise ships or ocean liners which are huge cities floating on the sea.

VIA SATELLITE: How big of an opportunity is IRIS² for SES?

Al-Saleh: The scale of IRIS² is immense, with several key dynamics at play. Europe is determined to build a sovereign constellation for its connectivity needs without having to rely on others.

For us, this project is significant for various reasons. It involves a concession contract, a private-public partnership where the European Commission will co-invest with us, alleviating the upfront investment that SES, Eutelsat, or Hispasat would otherwise bear alone. Additionally, as we reach full capacity with the launch of our 12th and 13th O3b mPOWER satellites in 2026, we need to think about the next constellation to meet future demand. This project lays the foundation for that future network, allowing us to advance our vision of augmenting our MEO network today.

One of the issues with our current investment approach is that we often think in terms of the next constellation and end up building isolated networks. From now on, SES will focus on building integrated networks, especially an integrated MEO network. The beauty of MEO is that it doesn’t require much to boost capacity; adding a few satellites to an existing network can significantly increase its capacity.

With IRIS², we are creating the foundation of next-generation satellites with enhanced capabilities that can communicate seamlessly with one another. This new network will be integrated with the existing constellation so there is continuity in service delivery. Finally, if signed, the European Union will be anchor customer for the IRIS² project and the MEO constellation.

VIA SATELLITE: Can you outline what you believe to be the capital expenditure balance between GEO and non-GEO satellites over the next few years? Will the investments predominantly be in O3B satellites?

Al-Saleh: We will be investing more in MEO than GEO and oscillating between 70/30, 80/20, and 90/10. There may also be years where it is 100 percent MEO. We will be building GEOs for specific applications for where we exactly need it. An example is ASTRA 1P that we just launched at 19.2 degrees East orbit for our video business over Europe. I also don’t see a scenario when GEOs will be more than a MEO investment, because of the robustness of the GEO fleet we have.

VIA SATELLITE: You were hired in October and started as the CEO in February. Less than three months after you started, you did the deal for Intelsat. Why was it that quick?

Al-Saleh: It wasn’t very hard for me to see that in order for us to be a credible competitor in the market, we needed more scale. Not only more scale in terms of satellites, engineering and ground capabilities, but also scale of investment capability. The market is moving away from this peaks and valleys type of capital expenditure. Investing big for three years and not investing for three years is a flawed model in my opinion. What you need to have as a company is the capacity to invest every year consistently in the areas that you need to grow. For us, a combined company will have the firepower to invest $600 million to $650 million every year. We will be investing $2 billion every three years. Neither us nor Intelsat could do this alone.

When I arrived at SES, a lot of groundwork had already been laid. Both companies had previously attempted to close the deal, so we knew the teams and were familiar with each other. We had completed the due diligence. In my meetings with David Wajsgras, we found strong alignment on the industry and our path forward.

I brought a slightly different approach compared to before. As a new face to the industry, I was able to change the setting. Negotiating for a year can leave scars and difficulties, but Dave and I were able to come to an agreement that made sense for both companies and we moved quickly. This is how I operate; if I see an opportunity, I go for it.

VIA SATELLITE: We have seen three major pieces of consolidation – Eutelsat/OneWeb, Viasat/Inmarsat and now SES/Intelsat. Do you believe there could still be more?

Al-Saleh: I think so. There is a question in terms of how many of the regional GEO players will survive and how many of them are able to have a business case to replace their satellites in the future. That is hard. There are a lot of new technologies coming in with micro-satellites that are very interesting and could be very disruptive. The intense disruption and competitive pressures in this industry suggest that there will be more changes in the future.

VIA SATELLITE: What is the status of the acquisition at this point with regulatory approval?

Al-Saleh: We have quite a significant number of regulatory authorities that we need to file with, and the work started immediately as soon as we signed the transaction. SES is making good progress with filing processes, having already secured multiple regulatory approvals, including CFIUS [Committee on Foreign Investment in the United States] and from several other foreign direct investment authorities. There’s still some way to go, but the major long-lead clearances are proceeding to our initial expectations.

Everything is where we anticipated it would be at this point in the process and we are getting information requests from regulators who genuinely want to understand the logic and what it means to their markets. I am optimistic on the progress and confident we are going to get this closed in due time.

VIA SATELLITE: What are your thoughts on whether you will look to keep the Intelsat brand in some form?

Al-Saleh: We have done a lot of work on that. Currently, we have a work stream focused on the branding of the combined unit and the company. The name will be SES once the transaction closes. Our goal is to integrate the two companies into one; we will have leaders from both companies leading this new entity, ensuring it is not dominated by one company over the other.

While the name will be SES, we are exploring creative ways to retain some of the value of the Intelsat brand, which is the oldest operator in the world with significant accomplishments that should not be forgotten. Both branding teams of Intelsat and SES are working alongside one another to evolve the brand beyond just the name, ensuring we do not lose the value of Intelsat.

VIA SATELLITE: When we spoke with David Wajsgras earlier this fall, he said that Intelsat’s research into its own MEO constellation would be useful to the combined company. Can you give some insight into how far along SES is in thinking about the next generation of O3b mPOWER, and any key aspects at this point?

Al-Saleh: The good news is that Intelsat understood the value of the MEO orbit. This convergence of strategic thinking was key. If Intelsat had chosen to follow the path of Telesat and Eutelsat to build a LEO constellation, it would not have aligned with our thinking.

Today, as we are still separate companies, we continue to compete in the marketplace. But we have done enough work at the right level to understand the future opportunities after we close. We think that our expanded MEO capabilities of more O3b mPOWER satellites and our participation in IRIS² will benefit from the addition of Intelsat’s resources.

VIA SATELLITE: You mentioned about scale and far bigger investments in non-GEO assets. Did Intelsat’s lack of non-GEO assets bother you in any way?

Al-Saleh: The fundamental value of the SES/Intelsat transaction is that the two companies look similar and therefore there are sizable synergies when you bring these two companies together. If you consider Intelsat’s investment capabilities alongside ours, it isn’t clear that we would each have been able to build our own MEO constellation separately. The companies separately would not have been able to reach the same scale and capability as it will in a combined effort.

No, we did not see the absence of an NGSO constellation on their part as a hindrance. We like their strategy and the strength of their business. We admire what Dave and the leadership team achieved during challenging times, including their emergence from bankruptcy and how it positioned the company. We value their vertical focus, particularly their strong presence in the aero sector, their emphasis on government, and their maritime capabilities. There are many complementary strategic alignments, making the deal sensible beyond just the synergies.

VIA SATELLITE: How do traditional players, not just SES, stay in the race with the likes of SpaceX and Amazon’s Project Kuiper? You potentially have SES, Eutelsat, Telesat, Viasat, along with SpaceX and Kuiper. Six players. Is there enough demand for all of them?

Al-Saleh: There are many others beyond those you named. But the demand for satellite connectivity is expanding and growing and has evolved significantly over the past 40+ years. Initially satellite connectivity was used mainly for video distribution. However, it has now become more mainstream with people recognizing its ability to deliver ubiquitous, high-quality connectivity to complement terrestrial networks. This perspective has shifted dramatically in the last five years, largely due to the disruptive impact of Starlink. For example, John Deere, by integrating satellite services to expand rural connectivity, has opened up the agriculture industry to satellite services.

Another sector opening up for the satellite industry is the automotive industry. Starting in 2027, vehicles will begin to incorporate satellite communications, with broader adoption projected by 2030.

Even though the capacity required for each car is small, the sheer number of cars creates a substantial market. Similarly, IoT services are increasingly incorporating satellite connectivity alongside terrestrial options. While IoT was a significant trend 10 to 15 years ago, it has now become ubiquitous, with all devices connected. Telcos see enormous opportunities within IoT, and we too see the same opportunity.

Direct-to-Device is a huge play. I have spoken to many D2D players and most of them require partnerships, particularly in MEO, for their backhauls and resilience enhancement coverage. This is not just about going direct-to-device but also about moving traffic which represents a substantial emerging business. I am confident that the demand exists.

Consequently, this is why we have bifurcated our solutions. One segment demands simple, standard, easy-to-install, and easy-to-manage solutions. The other segment seeks more sophisticated solutions and more managed services where the complexity is removed from these services.

For example, media companies are increasingly approaching us, expressing a desire to move away from uplink services and large antennas on their broadcasting station roofs. They recognize our expertise and global teleport network, questioning why they should build their own infrastructure.

At the end of the day, as long as your business evolves into providing innovative vertical solutions, demand for your services will remain robust. However, if you only offer capacity, you must ensure your solutions are simple, standard, easy-to-use, and competitively priced to compete with major players. Failing to do so will make it difficult for you to succeed.

VIA SATELLITE: You mentioned how Starlink opened up the agriculture market through the John Deere deal and people have been enquiring about it. When will SES sign its first landmark deal in the agriculture arena?

Al-Saleh: The pipeline is good for agriculture. We think it is a sizeable opportunity. I don’t know if it is the next quarter or the quarter after that, but there will be good deals, not necessarily mega deals, which will see us expanding in agriculture and energy, and one or two other areas, like you have seen with aero.

VIA SATELLITE: Finally, you have had a super busy first year as the new CEO of SES. Has there been anything that has particularly surprised you?

Al-Saleh: I am still learning and I am immensely impressed with the engineering aspects of building a satellite and what it takes it get it up there. But I am also learning how slow we are. We are too slow as an industry. We need to develop and manufacture satellites within months and not five-year cycles. Some of this has been surprising, particularly why we haven’t transitioned to agile development and faster iteration sooner – something which SES is now committed to doing. Why haven’t we explored different models in the past and continued with the old waterfall development and manufacturing cycles? Why haven’t we disrupted the industry to accelerate it? Over the next 18 months, you will see us challenging the industry and moving much faster than before.

A few weeks ago, one of our teleports got caught by a forest fire in California. I was surprised by our employees who risked everything and remained in the teleport to fight the fire. They wanted to protect the teleport and the gateways. The dedication, loyalty and commitment to SES from our employees is incredibly surprising to me and I am very thankful for that. VS

[Read more about SES's acquisition of Intelsat in the Via Satellite content collection, "SES and Intelsat: The Biggest Deal of 2024"]