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Eutelsat calms Russia worries

Investors have grown concerned at the impact Russia’s economic downturn might be having on Eutelsat’s profitability. CEO Michel de Rosen took the opportunity of an in-depth interviews with the French press to say Eutelsat had renegotiated its contracts with Russian broadcasters, but that the new contracts had a ‘reverse’ clause allowing contract values to return to their previous (and higher values) as and when the Russian economy returned closer to normal.

De Rosen also said that Eutelsat was enjoying something of a revolution in that two major benefits within the rocket-launching sector were directly helping the satellite operator. The first was the benefits flowing from so-called ‘all-electric’ propulsion of a satellite, and this was leading to an extra one to three years of life in orbit, and thus directly improving Eutelsat’s profitability.

The second direct benefit from using all-electric satellites was that launch costs were lowered, in some cases significantly.  Investment bankers Exane BNP-Paribas suggests, in a note to clients, that each extra year of life of a satellite (beyond the usual 15 or so designed life) adds an extra 100 basis percentage points of operating profit margin for Eutelsat.

De Rosen added in the interviews that Eutelsat anticipated continued strong demand for satellite capacity from a number of different market sectors, not least Ultra-HDTV.

The bank rated Euteslat as “Outperform”. The market also seemed to like what it heard, and its share price rose by almost a Euro during the day to €32.35.

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