Eutelsat thrashed by investors

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Eutelsat saw its share price crash a massive 13.57 per cent, €2.49, to just €15.93 in volatile trading May 15th, following what was a profits warning from CEO Rodolphe Belmer. Indeed, during the trading session the fall was even more severe (to €15.27) from the previous day’s €18.42 price which represented a 52-week ‘Low’ for the stock.

Belmer had told market analysts that it expected “very slight growth” in revenues next year (starting in July) as it was confident its five core verticals can continue to improve. The market took this as a disappointment. Next year’s trading (FY19) top-line growth should also be helped by a China Unicom contract on Eutelsat 172B (from January 2019 on), as well as the late entry into service of the Konnect Africa project (August 2018) and the successful commercialisation of Eutelsat 174E.

Channel count on Eutelsat’s satellites was up significantly (8 per cent) to 6880 channels. But the end result is flat, or even a slight decline in Video revenues, suggesting that per channel, or per MHz rentals for capacity is down. This is inevitable with continued video compression and a shift to MPEG-4 transmission, but shows how hard Eutelsat has to run in adding new channels but with the end result that it stands still in terms of Video revenues.

But Belmer also said that its anticipated growth in broadband-by-satellite services was also moving much more slowly than expected.

As Sami Kassab, Exane/BNPP’s satellite analyst stated in a note to clients: “For Full Year 2018-2019, management’s insistence on ‘very slight growth’ leads us to cut our organic revenue growth forecast to 0.3 per cent from 1.1 per cent. This is largely driven by lower forecasts for Fixed Broadband (August 2018 launch of Konnect Africa vs. previous expectation of a July launch and slower take-off of the Viasat retail JV in Europe). We continue to anticipate modest growth (0.5 per cent vs. 1 per cent before) in Video and note the improving trends at Hotbird.”


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