Welcome to the SES 2024 Q1 results. My name is Jess, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero, and you'll be connected to an operator. I will now hand over to your host, Richard Whiteing, head of investor relations, to begin today's call. Thank you.
Good morning, everyone. Thanks for joining this analyst and investor call. The presentation was uploaded along with the press release to the investor section and the general press release section of the website if you don't already have it. The agenda is outlined on page one. In a moment, Adel Al-Saleh, CEO, will present the main Q1 business highlights and an overview of the transaction that we announced this morning, followed by Sandeep Jalan, CFO, to cover the financial aspects in more detail. As always, please note the disclaimer on page three. After some closing remarks from Adel, we will take your questions. With that, let me hand over to Adel.
Thank you, Richard. Good morning, good afternoon, good evening, everybody. First of all, I will start with apologies for rushing this announcement and getting you all on such short notice, and I appreciate everybody dialing in. As Richard said, we have a couple of topics today. The first one is our Q1 results, and the second, of course, is the exciting news that we want to share with you and go deeper on the transaction that we announced earlier this morning. So if we can go to slide number five, which is our first quarter results, we will make this quick, our first quarter results were very solid. It was a good start for the year. We delivered 2.5% growth year-on-year on our revenue. Revenue was at EUR 498 million, and adjusted EBITDA grew 4.7% year-on-year, which was EUR 275 million.
That is a solid start for us, which underpins our full-year forecast and outlook that we shared with you before. The growth was driven by our networks business, which grew almost 10%, 9.6% year-on-year, including some periodic revenues. Media delivered as expected, minus 5.2% year-on-year. As you know, that's the business that we understand where it's heading, and we know exactly what we need to be doing in order to manage it with a very high cash-generative profile. We had good renewals, more than EUR 125 million renewals, which kept a very strong protected contract backlog at EUR 4 billion, which is a good position to be in. Our adjusted free cash flow was +$38 million, which is a very good swing compared to last year's first quarter as well. Our net leverage was at 1.5x, including EUR 2.4 billion of cash and cash equivalents, which are earning interest income.
Of course, one of the big important news besides our big transaction that we announced earlier today is our mPower began serving customers in April 2024, which is a couple of just one week ago. It's delivering on the multi-orbit capabilities and the customer offerings that we have committed. We're very excited about that. It's a highly sought-after capability. Our biggest challenge, colleagues, is actually managing the allocation of supply that's available in mPower. So that is where we are in the first quarter. As I said, it was a very strong start for the year, and we are happy where we landed, underpinning our financial outlook for you guys. If we can go then into the next section unless, Richard, you want me to pause here and get any questions on first quarter?
No, that's fine.
Okay. So let's go to slide seven. It's exciting news for us. We've announced that we have gone after the acquisition of Intelsat. As I said in my previous investor relations call, we were evaluating different options of how to deploy the cash that we had, focusing on the midterm and long-term of the company and the success, making sure that we deliver what our investors are looking for, which is investment-grade and continues our dividend policies. And we have achieved that in this transaction. There are 4 pillars of value that drive this transaction and why it was compelling to us to proceed. Pillar one, it's a highly accretive acquisition. It combines two trusted operators. Both have strong fundamentals and financials. It's underpinned by EUR 2.4 billion of net present value of highly visible synergies. We'll walk you through them in a couple of minutes.
That basically represents 85% of the equity value. This deal makes a lot of sense to bring these two companies complementary together in order to create a bigger player in the marketplace. 70% of the annual run-rate synergies would be delivered by year 3 through disciplined execution. We've diligence that. We've looked at it. We have plans now. We're going to start rolling our integration activities with focus on how we get to these synergies as quick as possible. And we'll show you the financial profile in a couple of minutes. The second pillar of value, it's creating a stronger multi-orbit operator.
Not only do we have a robust network of satellites, ground equipment, ground-terrestrial networks that connects our teleports gateways to our satellites, but also complementary spectrum capability that spans Ka, Ku, military bands, UHF, X-band, C-band, etc., that gives us a unique position in the marketplace to be able to deliver to our clients. It makes the company almost a EUR 4 billion company. We prioritize and reorient it towards growth markets, which is the markets that are experiencing and we've shown it to you over the last several quarters, the growth that we have, particularly in our networks business. That enables us to continue to invest in the areas to continue to be strong and a leader in the market. So that's pillar number two of value.
Pillar number three is the ability with a combined company to deliver compelling solutions to our customers, vertically focused, specific around their applications, easy to integrate, easy to make sure that they're usable for our clients. It gives us a reliable and efficient solution for fixed data and media client needs that require scale and requires efficiency. It positions us very well to drive value with segment-relevant solutions, as I said, vertical-specific solutions to the markets that really need them. So that is the third pillar of value. The fourth pillar of value, it really does deliver our shareholder returns. It accelerates our EBITDA and free cash flow generation of the company. We'll show you that in a couple of minutes. It maintains our investment grade and strong balance sheet metrics, and it keeps our commitment to stable to progressive dividend to our shareholders.
So this is an accretive deal to our shareholders from year one. So let me walk you through a couple of more details. Let's go to the next slide, which is transaction overview on page number eight. So the way the transaction is structured is we pay $3.1 billion, EUR 2.8 billion, to acquire 100% of Intelsat equity in an all-cash transaction and certain contingent value rights, which CVR. The acquisition is funded using existing cash resources and new debt, including hybrids, supported by a committed bridge facility that we have secured. It values Intelsat overall enterprise value at $5 billion, EUR 4.6 billion, before synergies of EUR 2.4 billion NPV. The acquisition is very much in line with our disciplined financial policy. We did not deviate from that in order to do this transaction. We'll show you more details in a couple of slides.
The transaction was unanimously approved by both boards, SES and Intelsat, and supported by the Luxembourg government shareholders. SES and Intelsat management teams are focused on execution to deliver our financial commitments this year while we start our integration activities and planning to do that integration. Of course, the transaction is subject to relevant regulatory clearances. We expect to clear these regulatory requirements by the close of 2025 or sometime in the second half of 2025. The company will remain headquartered in Luxembourg with continued presence in greater Washington, D.C. areas. So we're committed on both sides of the Atlantic when you think about this transaction. Now, let me unpeel the onion a little bit. Let me go a little bit deeper on each of these value pillars that I described to you. So let's go to slide number 10. So skip number nine and go straight to 10.
So the first value pillar, as I described, was the highly accretive nature of this acquisition. Let me just walk through a few data points to explain why we're talking about it. First of all, both companies have established track record of delivering customer value. Both companies have very strong backlogs. And you can see Intelsat, especially over the last couple of years, has made very strong progress in strengthening their business. And if you look at our backlogs together, they have EUR 4 billion backlog, secure backlog. We have EUR 5 billion. It gives us a diversified customer base. It's not highly concentrated around one or two or 10 clients. It's highly diversified between the two companies. If you look at our capabilities in terms of infrastructure and networks, the combination will give us an integrated global space and, of course, terrestrial infrastructure to deliver our solutions.
The combined company will have more than 100 geosatellites, 57 coming from Intelsat and 43 geosatellites coming from us, plus 26 meosatellites in orbits, which gives us an expanded network covering the globe. We cover 99% of the globe with our networks. Both companies investing in the future, driving productivity and customer experiences. We have almost 15, sorry, 13 satellites that are already in order. If you just look at 26, there's more satellites coming beyond 2026. Intelsat has 4 future geo software-defined satellites that are on order that will be coming in. We have 2 that will be launched in 2026. And of course, we have continuation of the rollout of the meosatellites, the mPower that is already in service. So the combination will give us a faster, more agile ability to invest in some latest technologies to give us an advantage in the marketplace. We're both driving growth.
We both have seen an expansion of our, especially government and mobility segments. Intelsat has delivered 5% growth in the network business in 2023. We delivered 6%. The combination gives us even further acceleration from an outlook and growth perspective. You look at profitability of both companies, we both have strong financials. I would argue these are the two companies that have probably best balance sheets in our industry today. Intelsat has 41% EBITDA margin in 2023. We have 50%. And we both have a profitable growth outlook going forward. Both companies have strong balance sheets when it comes to net leverage, 2.2x with Intelsat and 1.4x at the end of 2023 at SES. So it gives us a stronger investment capability while being disciplined and investment-grade. We deliver positive cash flow generation. We have machines that are driving.
We have Intelsat at EUR 350 million and improving going forward. We, of course, deliver EUR 530 million adjusted EBITDA plus CapEx in 2023 and improving going forward. This transaction from year one, I have to say, is accretive and cash flow positive. If you go to the next slide, as I said, the highly accretive nature of the transaction is underpinned by EUR 2.4 billion worth of net present value of synergies. These are not depending on growth. These are things we define. We know what they are. We know how to get there. And they're split between operating expenses and capital expenditures. In operating expenses, it's around general OpEx and procurement efficiencies. It's about aligning our ground infrastructure, network management, IT capabilities, cybersecurity, etc., that delivers about EUR 210 million run-rate synergies per year.
If you look at the right-hand side of the slide, this is the CAPEX synergies where we have non-satellite CAPEX in the ground where we can clearly leverage the latest technologies and remove the duplications that we will have across the two companies in the networks and infrastructures. A terrestrial network is a good example. We both have very large terrestrial networks supporting our teleports and gateways using almost overlapping capabilities that there is a clear synergy there. But also, it's about optimizing the future multi-orbit satellite investments and fleets. We just don't need to spend as much money as we were spending separately. The combination would give us an opportunity to reduce that. That is about EUR 160 million run-rate synergies per year going forward. So that is EUR 370 million combined run-rate synergies per year. There are other upsides that we didn't count in the equation.
We left them as an upside for us going forward, especially as we explore the pre- and post-closing situation of the companies. So this EUR 2.4 billion net present value of synergies is 85% of Intelsat's equity value. That's why, ladies and gentlemen, this is highly accretive transaction from day one or year one, let's say. If you go to the next slide, slide number 12, this is how we envision execution and delivery of these synergies over the next five years. You can see that in the first three years, we deliver the obvious top three areas, which is general operating expenses, third-party capacity, procurement efficiencies. For the ground infrastructure and future fleet optimization, we're a little bit more balanced, a little bit more conservative because we want to do it right in order to make sure that we're not impacting our competitiveness or our capabilities in the marketplace.
That typically requires a couple of years of planning and a couple of years of execution. However, if you just look at the top three, that represents 70% of the run rate of the 200, so it represents EUR 260 million overall from the synergies that we've described that we will be achieving per year, which is at EUR 370 million, and that's 70% of it. And we can execute that by end of year three. And the remaining, which is EUR 110 million, we'll be executing that between year four and year five. And I have to just emphasize again; we have diligence this with the Intelsat team and very comfortable to be able to execute that.
So now, if you go to the next pillar of value, which is creating a stronger multi-orbit operator, I want to reflect first by going to slide number 14 of the dynamics in the market that we're operating in. I think we all know this, especially everyone that covers that market, that this is a highly dynamic market. There's new competition. This market is moving very fast. New LEO entrants that are launching their constellations. There's rapid innovation, both in space as well as on the ground, new technologies coming into effect. So having a scale and a multi-orbit capability is critical to success. Being isolated or cornered into one part of the market without having a breadth and capability to compete is a difficult way to compete in this market.
The second is there's no question that satellite, especially satellite communications, is continuing to be very strategic for governments across the world. The geopolitical environment, the realization of what you can do with this technology is accelerating the investments across the world, not just United States government, but also across the European governments and many governments around the world. So having sovereign capabilities is very critical for the success of any company that wants to operate because it is one of the largest segments of opportunities for satellite operators across the world. The demand is expanding, right? It's moving very fast to high-performance mobility networks. There are new applications that we're beginning to see. Satellite-based networks are being implemented beyond simple communications in the commercial uses, in the government spaces, in cybersecurity, etc.
So being able to deliver end-to-end solutions, being able to have the right market coverage is very important for the success of the future of any player in this space. And of course, the last point around the market environment is the role of the satellite in broadcast TV and media consumption is evolving. There is no question there is pressure. However, it remains the most compelling and efficient means to distribute content to many, many citizens across the world. And things like sports and events continue to lean heavily on satellite capability to deliver the most efficient, cost-optimized way of delivering content around the world. So those are the dynamics that we're facing in the marketplace every day that we're competing. So if you go to the next slide, slide 15, how do we then position ourselves with the backdrop of that market dynamics?
I already alluded to this, right? We will create stronger expanded network capabilities that are multi-orbit. We are not just a geo player. We are an all-orbit player. But we have a very strong geo capability with more than 100 geosatellites plus 8 more to come between 2026 and 2027. And these 8 are all software-defined satellites, latest technology, leveraging the best architectures that are available, including state-of-the-art silicon that's now required for these software-defined satellites that are flexible in their missions and be able to move around different locations. With that, it gives us quite strong capability around multiple bands and multiple spectrums. So we have C, we have KU, we have KA, we have military KA, we have X-bands, and we have UHF across 70 orbit slots. That's 99% coverage of Earth, delivering 5 nines reliability services.
If you look at our MEO capability, we have 26 that are in orbit operational. We have seven to come by 2026. And of course, there are more beyond 2026. There's two more early 2027. So that combination between GEO and MEO with MEO delivering latency at about 120 milliseconds opens up the type of applications that we're able to deliver to our clients. And that interaction between GEO and MEO and complementary nature between the two is very, very important to deliver different applications for our clients today. And of course, we both have strong LEO partnerships. We have not ourselves dug into building LEO constellations, but we have leveraged very strong partnerships capabilities in order to be able to deliver a compelling solution to our clients.
When you look at our ground capability, the global network, the global teleports that we have, the operation centers, the data centers, and the fiber lines with 24/7 capability really gives us a unique network coverage that clients really need. Now, with that, if you go to slide number 16, the stronger positioning in a multi-orbit capability really gives us also ways to deliver to clients that we would struggle to deliver it independently. Here, I try to lay out the whole value chain of how we deal with our clients, right? When you think about people on the ground working with customers in defining what the customer needs are and then translating that into the solutions is something we will have very good coverage of.
Then being able to use our engineering expertise to plan the solutions using strong analytical skills and understanding what the network can do and then defining additional things that we would be able to add to it in the future is also important in terms of skill and capability. Being able to implement that and do that securely across the world is something every operator needs to do. With the expanded capabilities we have, we can be the trusted provider to our customers. Of course, delivering the operations with the support required with the type of mission-critical solutions that we deliver is something our customers look for. This gives us the ability to deliver this end-to-end to our clients. That expanded engineering capability and knowledge of the technology gives us a differentiating positioning in the market.
If you think about the markets we serve, so if you go to slide 17, it really puts us very well positioned in the high-growth markets. 60% of the revenue of the combined company will be in growth markets. We'll have about EUR 800 million in the high-growth government market that's growing at about 7% CAGR going forward to EUR 13 billion market. If you look at the mobility space, which is aero and cruise, of course, and maritime, we'll have EUR 800 million business there. That is also a high-growth market with double digit. If you think about fixed data and cloud, we will have a EUR 600 million business at that point. That business is also growing at 8%.
Of course, we will have EUR 1.6 billion, so 40% of our business will be in our media business, which is under pressure of declining top line but has and will remain to have very strong cash fundamentals going forward. That capability underpins our strength in our financial and our balance sheet, but as well as ability to grow our growth businesses as we go forward. If you go to the next slide, slide 18, this now shows you a picture of what the total company will look like. We just picked a couple of metrics, right? The financial profile is quite compelling. We go from a EUR 5 billion backlog in SES alone to EUR 9 billion with a combined company. If you look at our revenue, our combined company will be EUR 3.8 billion company, and these are by 2024.
If you look at our network business as a percentage of total, today, we have 52% of our business sitting in the network. In the future, it will be 60% of our business based on 2023 actuals. If you look at the adjusted EBITDA plus CAPEX as a proxy for cash generation, we go from EUR 500 million to about EUR 800 million in 2024 forecast that we have. We will get to net leverage less than 3x 12-18 months post-closing. This is definitely underpinning our discipline and making sure that we remain investment-grade and deliver our shareholder returns. If you go to the next slide, I said it earlier. Look, the business that we're in requires continuous innovation. It requires continuous investment.
Being able to be in a position that you have a strong cash generation that allows you to invest without having to stress your balance sheet, without having to over lever yourself is very, very important to be a healthy player in the marketplace. It allows you to invest in your network infrastructure using the latest technologies like we're doing with additional software-defined satellites that are coming. There'll be more. It allows you to build vertical solutions for the clients. That gives you an ability to integrate things, to create software that makes it easier for our customers to use our solutions. And it allows us to diversify. It allows us to look into new areas of things like quantum key distribution, Internet of Things, device to device, Earth observation.
Those are all areas we're interested in to continue to expand our portfolio of capabilities, not drifting too far away from our core, which is connectivity and satellite connectivity for our clients. So being able to do those things positions you very well into the midterm and the long-term growth of the company. Of course, everything, well, I'll continue to emphasize it, is underpinned by our commitment to be financially disciplined and laser-focused on execution. The next pillar is about customer value, right, and how do we deliver that. We divided it into two buckets. So if you go to slide number 21, first, we have the high-growth, high-demand markets that are around government, aviation, and maritime cruise. The combined company will be a very large provider for very important customers around the world, whether it's European governments, the US, UK, NATO, and UN requirements.
There is much bigger demand growing around sovereign solutions, sovereign capabilities, sovereign network anywhere on Earth, on land, at sea, in the air. That requirement is definitely there for us to capture. And of course, being able to deliver that with protected multi-frequency and multi-orbit solution for interoperability resilience is something the governments look for, that you are not exposed to one particular area of the network that you're delivering. In aviation, Intelsat has been a leader in that space. They have more than 3,000 aircraft. This is a high-growth market. You've seen a lot of the announcements that Intelsat has made recently. We have our own play in this marketplace. And we all believe strongly that having connectivity on planes, especially global international routes, is a must-have now. It's not just a differentiator. It's kind of minimum you have to have available for your passengers.
We'll be able to integrate a suite of integrated IFC services based on multi-frequency, based on multi-orbit solutions to give the resilience and the quality that the aero customers want. If you think about maritime and cruise, we already have a very good foothold and footprint in the cruise market. We're serving 5 major cruise lines with over 100 ships with fiber-like connectivity on the ships. That demand is also growing. It's not only growing in terms of connectivity, but it's growing in terms of managed services, flexibility, and really delivering quality of experience to the customers that our customers have. This integrated network of solutions offers that seamless connectivity for the client. So being able to provide this high-demand, high-growth market with this highly flexible and robust network is something that we're going to be very well positioned to do.
If you go to the next slide, you also need to be very efficient and reliable to some of the other markets like fixed data, where we're supporting major telecom companies and cable network operators to provide services where they struggle to build their terrestrial networks. That demand continues to be very robust for us. The demand for fiber-like connectivity for mobile backhaul and private 5G connectivity, cloud carrier redundancy, backup solutions in case terrestrial networks fail, continues to be quite active in the marketplace. We'll be able to offer our customers this extended network reach with a combination of GEO MEO and LEO partnerships for our customers.
Of course, our media business, which continues to be really important to us, it will be 40% of our business serving major broadcasters around the world, delivering more than 10,000 channels to hundreds of millions of TME homes and 2 billion customers across the world. It's very important to be able to manage very well and very efficiently as there is pressure on the top line. The persistence of the demand will continue, especially around free-to-air capabilities, experiences, especially in emerging markets, and sports and events capabilities that we are very, very strong on. Both companies are strong in that. But those solutions require very strong networks, and they require the quality and the reliability that our customers look for.
So the ability to deliver those solutions is really, really important both from a growth market perspective and the efficiencies that's required in markets that are under pressure, if you will. So if you go to the next slide, 23, so what does this mean, right? It comes all together with customer being at the middle of everything we do and being able to deliver to them what they need today and midterm and long-term as their requirements evolve. We do that through a much better improved network that gives you reach and service capability and resilience anywhere in the world. It gives us an ability to deliver enhanced connectivity with fiber-like performance, with quality metrics, and value for money for our clients. It gives our clients a short capacity, supply for secure data, and media networks well into the future, not just today.
And it gives them greater choice of how they want to deploy the space capability with the multi-orbit, multi-band networks that we have. We will give them seamless integration across the different broader networks with our technologies, with our software capabilities. It gives us the ability to deliver flexible solutions, end-to-end capabilities with managed services, delivering what the clients want and not just capacity alone. And it gives us the ability to continue to innovate for our clients to deliver that. So those are the values that we believe we will be delivering as a combined company. Now, the last pillar of value is all about shareholders and what we're able to deliver that. And I will ask Sandeep to jump in and help me deliver those messages. Sandeep, please go ahead.
Thanks, Adel. Good day, everyone.
Starting from slide 25, let me explain to you how this transaction is building shareholder returns. This transaction, first of all, creates a competitive and very well-positioned player to address the challenges and opportunities in our sector. It's good for all stakeholders. Our customers are employees and our investors. This transaction is highly synergistic and value-creative with EUR 2.4 billion NPV of synergies, and it is fully in line with our financial policy. Timing is also good as both the companies have successfully realized significant C-band proceeds, and we continue to have over EUR 3.5 billion in cash as a combined company. With that, we have the two strongest balance sheets in our sector.
SES, our net leverage at December 2023 was 1.5x and remains similar at about 1.4x when we factor a pro forma for the ongoing share buybacks and the C-band reimbursement of close to EUR 410 million. Intelsat net leverage is expected to be 2.2x with the pro forma for a dividend of EUR 130 million and C-band reimbursements, which are totaling to EUR 435 million. C-band receivables for both the companies add up to about EUR 0.85 billion. The combined company is expected to be about 3.5x at closing and expected to deliver pretty quickly to our threshold of below 3x within a period of 12-18 months from closing. The combined revenue for 2024 is expected to be at EUR 3.8 billion with very similar size revenues outlook from both the companies after the intercompany eliminations.
These revenues are supported by industry-leading combined order backlog of EUR 9 billion as of December 2023 from both the companies. EBITDA outlook for 2024 for Intelsat stands at EUR 0.8 billion-EUR 0.83 billion. And when combined with the SES outlook for 2024, it leads to a solid EUR 1.8 billion EBITDA for the combined group. CAPEX outlook for Intelsat is once again very similar to that of SES, and the combined company CAPEX should be in the order of EUR 1 billion+. Moving on to slide 26, the combined company is well-positioned with a good solid base of EUR 3.8 billion revenue, EUR 1.8 billion EBITDA, and about EUR 1 billion of CAPEX. But as we go past closing, which is expected to be in the second half of 2025, we would expect EBITDA growth at the mid-single-digit %. And this will be helped by two components.
Firstly, a low single-digit growth in the revenue, which is driven by 60% of the revenue being positioned in highly growth-oriented network business, including fast-growing and valuable government and mobility business. Second component is highly realizable and visible OPEX synergies that will quickly ramp up towards EUR 210 million per year. On the other hand, both companies' CAPEX, which is running at a combined EUR 1 billion plus level due to some ongoing major investments, should normalize as well as reduce due to synergies of EUR 160 million per year. The combined company expects average annual CAPEX of EUR 600 million-EUR 650 million over the next four years, which is from 2025 to 2028. This provides really a solid foundation for growth in our free cash flow generation as a combined company.
Moving to slide 27, this transaction is fully in line with the three pillars of our disciplined financial policy. Firstly, as I explained, both companies have the strongest balance sheet in the sector with sizable cash of EUR 3.5 billion. At closing, we expect to be at 3.5X net debt leverage. However, we expect very quick delivering back to below 3X net debt leverage within 12 to 18 months post-close. As a combined company, we expect to maintain strong investment-grade metrics. We have conducted also a rating evaluation process with both agencies and are confirming this outlook. We continue to maintain a stable-to-progressive dividend policy. We will maintain the current dividend of EUR 0.50 per share and also believe that the expanding cash flows, the combined company is very well positioned for acceleration in shareholder returns. We have evaluated this transaction from a lens of high financial discipline.
On top of the obvious strategy and business merits, it ticks all the boxes for a financially disciplined investment: an IRR, which is over 10%. A higher free cash flow per share than a standalone company, which is leading to a free cash flow accretion for our shareholders from the first year itself. And the combined company will be highly cash-generative and should allow flexibility for disciplined users in growth of total shareholder returns. Once again, we are very pleased and excited with this transaction and the solid prospects of the combined company. We look forward to the part of closing. In the meanwhile, we and our teams will remain laser-focused on execution of our business targets for the year 2025 and ahead. With that, I will hand over back to Adel.
Very good. Thank you, Sandeep.
Very good. I'm just going to try to conclude here and open up to Q&A. I'm sure you guys have a lot of questions. So let me just summarize the things that we just went through. So this is a value accretive acquisitions. It is clear how we get to that value accretion very quickly, and we're confident we can execute on it. It creates a stronger multi-orbit operator. We think that is required in order to compete, in order to be successful midterm and long-term. And it expands and reorients our revenue towards the high-demand, high-growth segments in the marketplace where the combined company will have good footprints in. It combines complementary assets, capabilities, innovations, world-class talents from both companies to deliver unique things to our clients. And it makes sure that we deliver the customer value that they're looking for in the key segments that we're focused on.
It accelerates profit growth, as Sandeep just showed you, both from a cash generation as well as an EBITDA growth over medium term starting in year one of the transaction. It's fully aligned with SES financial policy, disciplined financial policy, to ensure we continue to deliver a shareholder return. With that, I will stop here, Richard, and I will open it up for questions.
If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. Our first question comes from the line of Sami Kassab from BNP Paribas. Please go ahead. Thank you. Good morning, everyone. I have three questions, please, Adel, to start with.
Historically, Intelsat had quite significant tax assets with perhaps more than $3 billion of NOLs sitting in Luxembourg. Are the tax assets part of the EUR 2.4 billion NPV, or are the tax assets potentially coming on top of what you disclosed this morning? Secondly, you have structured the transaction with contingent value rights based on expectations of potential C-band proceeds on top of what has been cleared so far. Do you have any indicative time frame as to when you think you may be able to monetize the additional 100 megahertz? And lastly, can you please comment on the latest development on IRIS²? Does today's acquisition mean you are likely to take part in IRIS² if and when that project finally materializes? Thank you.
Thank you. Thank you very much for the questions. Sandeep, why don't you take the first part, which is how we value the tax NOLs?
Yeah. So Sami, on the tax assets, clearly, this entity has had a lot of tax losses. So clearly, there are some beneficial tax attributes that we should be able to benefit as a combined company. But clearly, for the purpose of valuation, for the purpose of the synergies of EUR 2.4 billion that we are referring, these do not take into account the tax attributes. So these are really the recurrent synergies that we are highly confident from our OPEX and CAPEX parameters.
Very good. Thank you, Sandeep. On the second question, in terms of CVR and the future potential of the C-band distribution again and the time frame, look, we believe that is a few years out, right? It's not something that will happen quite recently.
There is a lot of demand that continues to build for C-band, including, by the way, device-to-device. The mobile operators also are expanding their 5G coverage and using C-band spectrum, as you know. We expect that that discussion and dialogue will start in a couple of years. It will be probably 2-3 years until we see the potential realization of that additional distribution. But that's something, of course, for FCC and us to work with them to figure out if that makes sense. Regarding IRIS², as I emphasized multiple times, we're all about providing government sovereign capabilities. I believe this transaction positions us even stronger for IRIS² because as the European Commission decides to go forward and build a constellation, they will also need to ensure that there is high usage of that constellation.
And having a large player like us and others to be able to leverage the network and drive traffic into the network is very important in addition to, of course, building, operating, and delivering it to the governments as well. So I see that as very much a complementary situation. Thank you for the questions.
Thank you, gentlemen.
The next question comes from the line of Carl Murdock- Smith from Berenberg. Please go ahead.
Good morning. Thanks very much. Three questions from me as well, please. Firstly, just what is different now to when talks took place a year ago? And then secondly, there's a footnote regarding Intelsat talking about $175 million of non-cash items or non-cash revenue. I was wondering if you could kind of expand on that and explain what that non-cash revenue and EBITDA relates to.
Then thirdly, Adel, I suppose looking both at Intelsat and at SES, at both, we've seen new CEOs come in and very quickly announce transformational M&A incredibly soon after joining. So I guess my question to you is, what made you reach this conclusion regarding this deal so quickly? Or was it more a board-led process? Thank you.
Thank you, Carl. What if we take the second question first? Sandeep, can you just answer the EUR 175 million non-cash items, and what does it mean?
Yeah. So thanks, Carl, for your question. So we have disclosed that in the Intelsat revenues, there is about EUR 165 million of non-cash revenues for 2023. For 2024, this number is EUR 175 million. This primarily pertains to some of their large revenue contracts, which were monetized during the bankruptcy process.
This value is roughly in the order of about EUR 600 million on the balance sheet, but it's currently getting flushed over the next few years. It goes as far as 2030s. But it continues to go down. It will go down very rapidly to below EUR 100 million as we look forward to 2026 and 2027.
Very good. Thank you, Sandeep. Well, Carl, let me start with the last question, and then come back to the first question, which is what's different today versus the last attempt. Look, I don't know if there is a connection between new CEOs coming in and going to transformation of deals. For us as a company, we were going through a lot of work already strategically. What's the best way to deploy the C-band proceeds that really impaired some of our networks in North America, as you know?
What is the right thing for midterm, long-term for the company in order to make sure we stay competitive in the marketplace? When I joined, that strategic discussions and thinking was well underway, right? It wasn't something that kicked off. But it didn't take me long to understand what are the options. We had to look at many different options. We had to look at multiple M&A opportunities, not just Intelsat. We had to look at just giving returns to our shareholders and then thinking about investments later. We thought about other areas of organic investment. We tried to figure out what do we need for, for example, IRIS² and others.
It was clear to us that this particular transaction, if we're able to successfully close it with the right type of value, is the most compelling proposition we had on the table for the company, for our shareholders, for our employees, etc. So that's why we went very fast. It didn't take me long to understand the options. But it wasn't clear whether or not we're able to reach an agreement with Intelsat at the right time. So things moved fast very quickly. And of course, on the Intelsat side, they've seen the value of this transaction as well, not just the return to their shareholders, but also about how do they take their company forward for the next several years. What's different from the past? Carl, there's a lot of things that are different.
First of all, timing is different from what it was a year and a half ago where Intelsat was emerging from bankruptcy. They had a lot of things to do. They had a lot of focus and a lot of priorities. We were also in a different state. Both companies have gone through quite significant evolution in a very short period of time in terms of where they want to focus, where the priorities of the markets need to be. Personnel were different. I mean, Dave and I, we saw real value here and worked very hard together to figure out how do we make this thing happen. The structure of the transaction is much simpler. It's a lot easier when you have an acquisition versus a merger, and you have to deal with different governance questions and how the setup looks like.
So there's a lot of things that made it different, Carl. But the biggest thing was the desire of both companies to build something unique here. We both saw that opportunity to create something valuable to our clients and to the market and solidify the company for the midterm, at least in the long term. That's what's different in my mind, Carl.
That's fantastic. Thanks very much.
The next question comes from the line of Akhil Dattani from JP Morgan. Please go ahead.
Hi, morning. Thanks for taking the questions. I've got a few as well, please, if I can. First, can we start maybe with a very basic question, maybe around the acquisition multiple Intelsat? I mean, obviously, I appreciate there are substantial synergies here. But I guess I was just wondering if you could help us piece together what the right starting acquisition EBITDA multiple is.
I think from the answer to Carl's question around the $175 million that's non-cash, I guess we would exclude that. So is it right to assume that this is sort of a 7x EBITDA multiple at start? And if it is, can you give us some color on the thought process around that multiple, given obviously, it does look a little bit on the high side? So that's the first question. Second one is just a very simple one just around the delivery of synergies. Just wondered if you could comment on whether there are meaningful integration costs that will need to be taken on board to help facilitate and drive that synergy realization. And then the third one, if you could just maybe help us around the debt stack. I guess just interested as to the funding structure here and how we should think about cost of debt.
I don't know if there's any sort of important items around the takeover of Intelsat debt, not the new fundraising we're doing. Any sort of early indication give us on cost of debt for the structure would be helpful. Thanks a lot.
Thank you very much. Why don't you, Sandeep, go ahead? I think you can answer all the questions. I'll jump in and help.
Yeah. Absolutely. So hi, Akhil. Thanks for your question. So on your first question on the non-cash revenue, as I explained, this is monetization that was done during the bankruptcy process. Post-bankruptcy process, no monetization has been done. So basically, these are still solid long-term revenues, and they will continue to go down as we go into future years. Now, in the valuation, as you can understand, we looked at it from different perspectives, right? Several perspectives. Of course, multiples, DCF, and all those approaches.
If you value the transaction just on a gross basis because some of these values should continue to be there, right, not all lost in this cash revenues, this is a multiple of 5.5x. If you add EUR 175 million of non-cash revenues and you deduct that, there is also a synergy component that we have to keep in mind. There is a EUR 2.5 billion, EUR 210 million recurrent OPEX, but also topped up by EUR 160 million of CAPEX synergies, which once again flow to the cash flows. So on the overall, when you take a balance of all those valuation approaches, we see that this transaction is highly accretive for our shareholders, whether we look at it from a multiple base, whether we take a look from a DCF approach.
Based on all those approaches, there's still a high level of value generation for our shareholders. In valuing this NPV of EUR 2.4 billion of synergies that we are giving, yes, this includes the cost of integration, the cost of synergies, etc. That is net of that. There is almost about EUR 300 million of transaction cost that is not part of the NPV of synergies, but that is factored once again in our valuation metrics when we value the value accretion for our shareholders. On the debt structure, the good news is that the combined entity is very well positioned with significant cash sitting on our balance sheet as well as Intelsat balance sheet. As I spoke earlier, we have close to EUR 3.5 billion. We are able to fund the equity purchase price. There is a debt as well.
We have taken a bridge of EUR 3 billion. Clearly, as we go along, we will be organizing further market takeout financing at appropriate intervals until closing and after closing. On the cost of debt, as you can see, our cost of debt remains highly competitive at about 3%. Clearly, the market has changed in the last couple of years. When we go on the market, we would still expect a competitive set of financing conditions and interest rates, which would still be quite attractive, of course, higher than 3%. But we believe that we should be able to secure very competitive rates with a combination of senior notes as well as some hybrids that we would like to tap as part of this transaction. I hope that answers your question.
Yes, it does. Thanks a lot.
The next question comes from the line of Nick Dempsey from Barclays. Please go ahead.
Yeah. Good morning, guys. I've got two questions left. So first one, can you give us a rough idea of the share of the U.S. government spend on commercial satellite capacity and services that SES and Intelsat combined would represent? And won't there be antitrust issues in this particular area as a result of that? Second one, how much has Intelsat's return to revenue growth been driven by their acquisition of Gogo, which I believe is a revenue stream that comes at a much lower margin? So is there a negative margin mix effect built into the Intelsat revenue growth model from here?
Let me start with that, and then, Sandeep, you can jump in. Look, I can't disclose the exact share of U.S. government.
But for us, both companies have similar positions with the government. And our business in the U.S. around the government is north of, let's say, $350 million-$400 million per year, not dissimilar to Intelsat, right, which is why we create a quite interesting player going forward. If you think about the share, right, I mean, the U.S. government space defense budget is several billion. I don't remember the exact number of what they spend. And the U.S. space defense just issued a very important strategic paper, which talks about the importance of commercial integration of satellite capabilities into their specific military applications and dedicated satellite constellations that the government owns. They clearly state in that strategy that their architecture of delivering services is highly, highly dependent on a breadth of commercial capabilities that the market can offer.
So I think many of the satellite players are seeing the benefit of that. So not just us. I mean, you can look at our competitors, and you can look at Starlink. You can look at others. We're all seeing an uptick in demand. And one thing the U.S. government is very clear about is they are going to be diversified. So they will look at multiple orbits. They will look at multiple capabilities. And therefore, when you put that all together, we wouldn't be a significant overarching share having a share of the U.S. government spend. It will be spread across several, many players, if you will, including smaller players in the marketplace. So for us, from a regulatory perspective, that's something we need to go through with the antitrust and work through it.
But, Nick, we got comfortable ourselves that we can have a good outcome in that area. But some work we need to do, right? We don't take it just lightly that it's just a slam dunk. We have to do some work there. But we don't foresee an issue there in that area. Regarding how much of the Intelsat growth is driven by Gogo, look, Gogo has been around for a period of time, right? That's an acquisition that's been there for several years. And the strength of Intelsat in the aero market is driven by the Gogo capability, which is one of the more advanced capabilities when it comes to quality of service, the experience on the plane, the interaction with the users. If you have experience flying different airlines, you'll see there is a big difference when you get and you try to connect what is the experience.
So that's been helping them drive that growth in terms of margin of that business. All of us are looking in the satellite industry of prospects of, do we add managed services into our pure wholesale selling of the satellite capacity? And we're all concluding that what the customers need is that integration capability. So that managed services layer on its own is lower margin, of course, than our typical capacity selling, if you will. But pure capacity selling, pure pipe selling, just like it is for telcos, is a dangerous place to be if you don't add value on top of that. So we're convinced adding value on top of that is critical for us in order to be able to continue to drive our capacity business as well as which is a high-margin business, as you know, and provide compelling solutions to our clients.
So the combination of both gives you certain compelling positioning for the market, for the customers, and ability to grow. And that's how I see Gogo and how Gogo plays a part of it. And their capabilities are quite impressive. So yeah, maybe on its own, a lower-margin business than pure capacity, but the complementing between the two of those is critical for the growth of the business. That's how we see it.
Yeah. And I'm just going to tack on one,
sorry. I'm just having to tack on one more question. I'm sorry, which is the $300 million of transaction costs—are they factored into the 3.5x net debt at closing?
Yes.
Yes. Absolutely.
Yep. Great. Thanks.
So all our transaction costs, including Sandeep already answered it. I think it was Akhil who was asking, including the cost of getting to the synergies.
They're all included in our analysis and in our at-the-end yielding results, financial results.
Thank you.
Our last question comes from the line of Roshan Ranjit from Deutsche Bank. Please go ahead.
Roshan, we can't hear you. You may be on mute.
Oh, sorry about that. Yep. Thanks for the questions. I've got three, please. So firstly, just on the CapEx, and it's just a quick follow-up to one of the prior questions. In your EUR 600-650, is that fair to take as a normalized level, or is there kind of some element of growth still coming near-term and there's scope for that to trend down to a more normalized level? Does that also include anything for IRIS², please?
Secondly, on the margin front, and I guess kind of related to the next question on Gogo, you have guided to a build-out of the channels nearer term with terminals. And I guess Intelsat have a similar thing. I guess how penetrated is their base with these newer terminals, or will that potentially have to be factored into kind of future forecasts? And lastly, just to follow up on the credit rating, I think Sandeep, you mentioned the discussions you've had with the agencies, and you are going to be above this kind of 3.3 times level, which you have previously guided to for investment grade. I mean, are the rating agencies comfortable with that, and there's no kind of risk to your investment grade rating? Thank you.
Go ahead, Sandeep.
Yep. Thanks, Roshan.
So firstly, on the CAPEX, we foresee that for the next 4 years, which is from 2025 to 2028, CAPEX range of EUR 600 million-EUR 650 million. This includes a bit higher level of CAPEX in the first couple of years given the fact that a lot of our investments as well as Intelsat investments, they are concentrated in the first couple of years. Intelsat has 5 satellites going in space by 2026. We have 3 of our GEO satellites as well as 7 next of MEO satellites going in space as well. So all this is leading to a bit higher CAPEX in the initial years and then followed by lower CAPEX as we go out. Have we included any additional growth CAPEX? No. Iris 2 is not included.
If and when we move with that project, that will be an upside and something that we will evaluate on its own merits. That means the profitability and respect of our financial policy in holistic sense, right, respecting the investment grade and the dividend. Second question on the Gogo front. On Gogo, they are very well catering a lot of aircraft. They have close to 300 aircraft in service. As of now, they are even transitioning to much cheaper antennas, which are the ESA terminals from Ku terminals. And this is as well making rapid progress. And we expect this will, again, accelerate the growth path on their ability to grow more and more catering to aircraft. They have a strong backlog of over 700 aircraft as we speak now, and this should further accelerate with this transition.
On the credit rating, yes, as usual, I mean, we have engaged in that dialogue with both agencies, and we have gone through all these metrics. As you can understand, when we close any sizable transaction, as of closing, we are remaining slightly elevated above our own thresholds with 3x, which we consider highly disciplined. But again, looking at all our plans going forward and the cash flow generation trajectory, the high synergies that will ramp up pretty quickly, we are highly confident that within a period of 12-18 months, we are able to bring it back within our investment grade thresholds of 3x. So based on that, we are highly confident this transaction is respecting our financial policy very holistically to total shareholder returns.
Great. That's helpful. Thank you.
On the CAPEX front, then what should we think about a normalized level beyond the kind of near-term growth period you said? Thanks.
[inaudible]
I was going to say it's the EUR 600 million-EUR 650 million is what we're saying is going to be our normalized kind of levels, right? So it will be as Sandeep said, there'll be some bumps when we have some investments up and down. But our normalized level run rate, we think it will be EUR 600 million-EUR 650 million, Roshan.
Yeah. Got it. Perfect. Thank you.
That's all the time we have for questions today. And I will now hand back to your host, Adel Al-Saleh, for closing remarks.
Well, just thank you, everybody. Thank you for reacting to the quick notice. We were planning to do it a little bit more organized, but here we go.
I wish you all a very nice day, and thank you for dialing in. Thanks, everyone.
Thank you for joining today. Bye. You may now disconnect your lines.