February 9th will see Eutelsat unveil its first-half year results. Equity analysts at investment bank Exane/BNP-Paribas, in a report February 1^st, say they expect the satellite operator to report a 4 per cent fall in organic revenues and not helped by a 2 per cent drop in the company’s all-important Video revenues and a significant 10 per cent fall in its Data segment.

One consequence, says the bank, is that management will announce a restructuring plan designed to trim around €10 million of targeted annual cost savings (with a restructuring charge of €17 million) and reducing staff, an assertion denied by the satellite operator. “Our benchmarking to industry peers suggests Eutelsat has some leeway to reduce staff in operations and administrative functions as it employs a higher staff count per satellite than peers,” says the bank. According to Eutelsat, the reduction in operating costs will derive from general costs. The headcount is not part of the cost reduction programme

Eutelsat reported in its first quarter financial update in October 2016 that it was working on operating cost savings, with the objective of reducing leverage, investing selectively in future growth opportunities and delivering an attractive dividend. Rodolphe Belmer, Eutelsat’s CEO said he would provide more detail on this when Eutelsat publishes its first half figures on February 9th.

“In an industry with long-lived assets, Eutelsat has to grapple with rapid technological changes. Excess capacity and pricing pressure in Data, compression jumps in Video distribution and terrestrial network expansion neutralise the benefits of increased capacity demand from mobility applications and video format migration. The recent departure of the CFO in the context of a group in transition is not reassuring. We see better risk/reward profiles elsewhere in Media and would avoid the shares into the numbers,” suggests the report.

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