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SES Navigates Industry Transformation Under Adel Al-Saleh’s Leadership
A year into his tenure as chief executive of SES, Adel Al-Saleh is guiding one of the world’s foremost satellite operators through a significant evolution. Focused on maintaining its position in the evolving space industry, SES faces pressure to counteract declining revenue from geostationary orbit (GEO) satellite TV services. Simultaneously, the company is striving to uphold broadband growth amidst intense competition from ventures like SpaceX’s Starlink in low Earth orbit (LEO), all while capitalizing on increasing European sovereign space investments.
Adapting to a Changing Satellite Landscape
Despite its 40-year history, SES, a long-established player, is once again seeking to redefine market dynamics in a sector transformed by Starlink’s emergence. The Luxembourg-based operator, a pioneer in multi-orbit services with its hybrid fleet of GEO and medium Earth orbit (MEO) satellites, is reinforcing this strategy under Al-Saleh’s direction. This is highlighted by a $3.1 billion bid to acquire Intelsat, a GEO operator partnering with Eutelsat’s OneWeb LEO constellation.
O3b mPower and Strategic Market Positioning
While awaiting regulatory approval for the Intelsat acquisition, SES is moving forward with its next-generation O3b mPower constellation in MEO. This initiative aims to secure its position in enterprise and government markets, areas where Starlink is making substantial progress.
Leadership Perspectives in a Dynamic Market
For Al-Saleh, a technology veteran transitioning into the space industry, the initial period has been demanding. However, he emphasizes the necessity for SES to accelerate its pace, exploring methods to shorten satellite development cycles to remain competitive in an increasingly dynamic marketplace.
Expanding into Direct-to-Device Services
SES recently declared its entry into the emerging direct-to-device (D2D) satellite market with an investment in Lynk Global. Lynk Global is developing a LEO constellation designed to enable telecommunications companies to connect standard mobile phones beyond cellular tower coverage. Al-Saleh identifies an opportunity to utilize MEO satellites as traffic relays, potentially giving SES an advantage over Starlink’s own D2D ambitions.
European Sovereign Space Initiatives and IRIS²
Concurrently, SES is playing a key role alongside France’s Eutelsat in the development of IRIS², the European Union’s $10 billion-plus multi-orbit network. IRIS² aims to enhance secure and sovereign connectivity in Europe.
Q&A with Adel Al-Saleh, CEO of SES
In the following Q&A, Adel Al-Saleh discusses SES’s strategic positioning with SpaceNews. He details how the company is aiming to stay ahead amid the extensive 800 billion euro ($871 billion) ReArm Europe Plan/Readiness 2030 initiative. This plan, spurred by geopolitical tensions and defense modernization needs, is expected to reshape the European space industry landscape.
Investment in Lynk Global and MEO Traffic Relay Strategy
SpaceNews: What motivated SES’s investment in Lynk Global?
Al-Saleh: Our investment extends beyond mere funding. We identified a strategic application for utilizing our MEO constellation to route data from LEO satellites, particularly smaller LEO constellations. Currently, SpaceX’s direct-to-device capabilities are limited with only 400 satellites, and AST SpaceMobile will have 100, which is inadequate for seamless global traffic movement. An essential infrastructure network is crucial to facilitate data flow and terrestrial connectivity in diverse locations.
Upon joining SES last year, we began exploring this capability and testing it with various D2D providers to assess market traction. Several D2D entities expressed interest in leveraging our MEO network and ground infrastructure to enhance their robustness, reach, and deployment speed. We selected Lynk due to our favorable view of their architecture and technology.
Furthermore, we have a strong relationship with their CEO, Ramu Potarazu, who recently departed from SES’s board. We are confident that this partnership holds the potential for significant innovation.
Intelsat Merger and Multi-Orbit Service Delivery
SpaceNews: Intelsat also has MEO plans. What benefits could they bring to SES post-merger?
Al-Saleh: In our discussions with Intelsat, we were encouraged by a shared perspective that MEO is financially viable, contrasting with the substantial investment required to establish another LEO constellation. Both companies believe in delivering multi-orbit services spanning GEO, MEO, and LEO through strategic partnerships.
Supporting European Sovereign Space Capabilities and IRIS²
SpaceNews: How is SES supporting Europe’s drive for independent space resources amidst global instability, such as the Ukraine war and concerns about external military support?
Al-Saleh: SES currently provides services in Ukraine utilizing our existing fleet and capabilities. While not publicly acknowledged, there is a clear increase in demand driven by concerns over geopolitical dynamics and speculation regarding potential disruptions to Starlink’s coverage in Ukraine.
Globally, awareness is growing regarding the necessity of diversifying reliance beyond a single provider, network, or orbit – a long-held position of SES.
European governments and others are increasingly recognizing the need for multiple options, whether it’s Starlink or SES. A more resilient and redundant architecture is essential globally.
While short-term demand for redundancy and alternatives is surging, the more critical development is the European recognition of IRIS²’s significance and their eagerness to accelerate its implementation.
Space will constitute a substantial portion of upcoming spending from nations like Germany. While one might question prioritizing space over traditional military assets, the answer lies in the vital role of communications within overall defense infrastructure.
Secure and reliable communication across different entities and missions is paramount. Even advanced military equipment is ineffective without secure communication with central command and field personnel.
Similarly, the secure operation of drones also relies heavily on communications infrastructure.
Secure communications infrastructure will be a leading area of investment. We are encouraged by requests for support from NATO and other governments and are well-positioned to provide it.
ReArm Europe Plan and Space Sector Benefits
SpaceNews: How much of the ReArm Europe plan will benefit space, and how is SES contributing to this expansion?
Al-Saleh: While the precise distribution of the ReArm Europe plan remains undetermined, secure communications, a core service we offer, is a fundamental component.
The U.S. Space Force’s robust satellite communications framework serves as a relevant example, one that many nations are likely to emulate.
Firstly, they have emphasized the importance of a multi-orbit architecture.
Secondly, they are establishing a hybrid space network that allows seamless data transfer as needed.
A key element of this strategy is the integration of commercial resources with defense operations, which is vital for scalability. Even the U.S., a leading defense spender, recognizes the necessity of integrating secure, hybrid multi-orbit communications across both military and commercial satellites.
Governments will refine this model, but its core principles will remain consistent.
SES is well-suited to contribute, operating satellites across multiple orbits and possessing the capability to manage traffic between them. We possess both the experience and the scalability to grow this capability. This is evident in our networks business, where we are developing our second-generation MEO constellation, with five additional O3b mPower satellites yet to be launched.
Future of O3b mPower and MEO Network Evolution
SpaceNews: Looking beyond O3b mPower, what’s next?
Al-Saleh: O3b mPower recently commenced operations in April 2024. We will increase its capacity by 30% with the deployment of the 7th and 8th O3b mPower satellites, followed by further capacity increments at the start of next year and in the first half of 2027. By then, the system’s capacity, speed, and coverage will be significantly enhanced.
Simultaneously, we are advancing with IRIS². Leading this initiative, we are also responsible for 18 MEO satellites, laying the groundwork for the next generation MEO network.
Our ambitions extend beyond IRIS². We will continuously enhance features annually, strengthening and creating a more resilient MEO network integrated with our GEO capabilities and LEO partnerships.
This approach distinguishes us from competitors who often offer single-orbit solutions and lack our hybrid architecture and software capabilities.
Luxembourg Government Shareholding and Shareholder Engagement
SpaceNews: While governments are crucial customers and partners for space ventures, Luxembourg is a major shareholder in SES. An activist shareholder has proposed reducing state control to better address industry challenges. What is your response?
Al-Saleh: Luxembourg has been a key supporter of SES since its inception. We are deeply grateful for the government’s contributions, both in the company’s early growth stages and during challenging periods.
The Luxembourg government strongly supports our strategy and enables our objectives. As CEO, I maintain transparency with all shareholders about the benefits we gain from the Luxembourg government, rather than viewing them as hindrances.
For instance, during increased demand from Ukraine, SES fulfills this demand through our NATO contract or Luxembourg government contracts, facilitating service to NATO and other nations. This is an advantage compared to companies needing to establish new contracts and negotiate. We operate through government-to-government agreements.
We also initiated a restructuring program across SES to enhance efficiency and agility, affecting over 10% of our Luxembourg workforce. While this is a sensitive matter for any government, Luxembourg remains supportive, recognizing market competitiveness and the need for efficiency. This recent example illustrates how their support simplifies execution.
Nevertheless, we listen to all shareholders, including those with long-term investments. We are seriously considering all shareholder recommendations and proposals.
Competition and Innovation Strategy
SpaceNews: Amazon is also entering the market, while Starlink is already disrupting the established order. How is SES adapting its strategy to innovate and grow amid such intense competition?
Al-Saleh: SES, with 40 years of operation, is consistently evolving. We are transforming our approach to innovation, research and development, and customer engagement. Our initial focus is on digitalizing operations through software, AI, and big data adoption.
While implemented in specific areas over recent years, we now aim to significantly expand their application across the company to enhance efficiency. Our decision to reduce headcount is a strategic move to improve efficiency and speed, not due to financial constraints. By reducing middle management by 20%, we are creating a less hierarchical structure, closer to employees, thus accelerating decision-making.
We are also fostering a revised approach to innovation with our partners, focusing on iterative future feature and function development. We are exploring methods to accelerate innovation and continuously enhance our network and customer solutions. Our partnership with Lynk is a co-development initiative.
We will integrate our networks with Lynk’s. They represent a new space company, offering agility from which we believe we will benefit, while they will benefit from our scale.
Accelerating Development Timelines Through Partnerships
SpaceNews: Are increased partnerships the key to accelerating development timelines in space?
Al-Saleh: Expediting space development schedules is achieved through both partnerships and internal projects.
Traditionally, the industry initiates satellite procurement and development with a clean slate, regardless of whether they are military, commercial GEO, or MEO satellites. This involves compiling all specifications and dedicating considerable time to translate them into the final design – a process that can take up to five years, similar to automotive manufacturers developing entirely new car models.
However, the pace of change demands a more iterative innovation strategy.
We must continuously introduce new features and launch new satellites annually. These satellites will be software-compatible both backward and forward, offering increased flexibility. Rather than developing isolated systems, we are building platforms for an integrated network.
This significant shift in development and innovation will substantially enhance our speed, enabling us to accelerate space development timelines.
The platforms will need enhanced flexibility, moving away from isolated entities to a continuously evolving network.
This represents a major evolution in our development and innovation approach, considerably increasing our speed and agility.