Eutelsat stumbles and disappoints market

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Eutelsat unveiled its Q1 results (to September 30th) and warned of slower progress for the rest of its fiscal year. The results were issued after the market closed on October 30th.

As the market opened on October 31st, its share price crashed 12.37 per cent to €18.34.

The revenue news was generally bad, and given that it was just three months since it issued favourable guidance for the year to June 30th 2019, taken as a near-profits warning.  Indeed, one equity analyst marked down his advice to “SELL” Eutelsat stock, and gave a target price downgrade for its shares to a miserable €13. Another questioned CEO Rodolphe Belmer as to why this was the third guidance downgrade in the past five quarter-years.

Belmer stressed the overall business was “stable”, and that Video would go from stable to “slightly growing” during its fiscal year.

Belmer also confirmed the operator had sold its stake in its Eutelsat 25B (to Qatar’s Es’HailSat) for €135 million.

He told analysts that Eutelsat had suffered a “set back” in its relations with the US government over contract renewals, and had won less business than expected.

Then he listed fall after fall across most divisions. Overall Q1 revenues were €335 million (€349m last year) and when currency costs were taken into account the drop was 2.7 per cent.  Video division revenues were down 1.7 per cent. Fixed data fell 12 per cent. Fixed broadband down 7.3 per cent.

There were some highlights, with Government services up 4.2 per cent, and Mobility up 11 per cent.

Michel Azibert, deputy CEO, told analysts that the decline in Video revenues came from lower professional video capacity bookings and “a lower contribution” from FRANSAT (the French digital DTH platform). “At the end of September 2018, the total number of channels broadcast by Eutelsat satellites stood at 6,999 up 3.6 percent y-o-y. Excluding the impact of the disposal of Eutelsat 25B, they would have been [up] by 4.9 percent.”

Also somewhat unexpected was Eutelsat’s fall in the number of HD channels carried, and not helped by the sale of Eutelsat 25B and therefore no longer in the operator’s total. Current HD channel count is 1419.

Eutelsat’s fill rate was 69 percent, up from 68.1 per cent at June 2018. Its all-important backlog of contracted business was €4.7 billion (down from €5.2 billion last year).

 


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