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Eutelsat Q1 “looming pressures”

October 21, 2015

The telecom team of equity analysts at investment bank Jefferies wrote their latest satellite overview before the news broke that Eutelsat CEO Michel de Rosen is retiring next March.  There was good news in that the return to flight of the International Launch Services (ILS) Proton rocket launcher should mean that Eutelsat’s 36C satellite should orbit before the end of this calendar year, and start earning its keep in 2016.

However, Eutelsat has also booked a flight with Proton’s rival SpaceX, and with further delays to the SpaceX return to flight (not much will happen before mid-December) this could have a compound knock-on effect for Eutelsat’s planned launch of its 117 West B satellite.

There is a double jeopardy attached to this flight insofar as it is an ‘all electric’ satellite which will take – says Jefferies – some 6-8 months to reach its target orbit. Jefferies says: “so even on the original

Q4 2015 launch timing; it wouldn’t have contributed anything to FY16 guidance. This is therefore a FY17 guidance pressure.”  While Eutelsat has been canny in buying the SpaceX launch, and they are good value especially when compared to Arianespace, the long period to orbit means a much-delayed benefit in terms of revenues from the satellite.

Jefferies quantifies the impact as follows: “Should the commercial service start date for Eutelsat

117 West B slip into FY17, then the growth contribution will be diminished, bringing the 5 percent guidance down with it. If we assume $1 million per transponder, then the 48 transponders of expansion capacity equates to $48 million (€42m) of incremental revenue in FY17. If it’s a quarter delay, that’s €10.5 million of “growth” that’s pushed back into FY18. This is equal to 70bps of FY16 revenue that may have to be accommodated within the current FY17 guidance of 4-6 per cent growth.”

Eutelsat will unveil its Q1 numbers on October 28th.

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