The French parliament has adopted an important amendment to its planned 2019 budget which will benefit Eutelsat.
The amendment, which will need to be approved by President Macron, according to a note to clients from investment bank Exane/BNPP, aims at reducing the tax rate on Eutelsat. “More specifically, pretax income generated on GEO satellites located at orbital slots not owned by Eutelsat (various slots over Africa, Russia, MENA in our view) will not be taxable in France. We do not expect the French president to veto this text and hence believe the new tax regime will start by calendar year end,” says the bank.
According to a report in French business newspaper Les Echos, this new tax regime could help Eutelsat save €20 million – €30 million per year in tax payments.
“We estimate that Eutelsat tax rate will fall from 32 per cent to 26 per cent from FY19 onwards. This is to produce a 9 per cent positive accretion to consensus Earnings Per Share and should help increase consensus,” says the bank.
Eutelsat’s two large rivals, Intelsat and SES, are both domiciled in Luxembourg and already enjoy lower taxes.