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Eutelsat reaffirms financial expectations

November 28, 2019

Eutelsat has spent the past few days meeting financial analysts, and supplying its mid-term outlook as to its trading expectations.

One investment bank, in a note to clients, advised that Eutelsat reaffirmed its mid-term outlook of a return to group top line growth driven by positive stability in revenues of the core Video broadcast business and fast growth in Connectivity (Mobility and Residential Broadband) offsetting declines in Fixed Data and Professional Video. “In Video, satellite replacement capex is expected to decline helping Free Cash Flow generation. Previous examples have shown capex reduction in excess of 30 per cent,” says Exane/BNPP’s note.

As to Eutelsat’s full year (which ends on June 30th 2020) the satellite operator’s top line growth rate is expected to improve (vs. Q1 and a loss of -6 per cent) in H2 driven by better business and additional revenues from new income streams including the Egnos payload, Eutelsat 7C and Konnect Africa.

“However, as for other satellite operators, Eutelsat’s guidance assumes no technical failure. The scope of the recent technical anomaly on Eutelsat 5 West B will be communicated by the end of this month. Around €37 million of annual revenues are at risk. A total or significant failure of this asset would cause management to restate its guidance,” alerts the bank.

For Full Year 2021 (the July 2020-June 2021 period) management expects group revenue trends to improve driven by the entry into commercial service of Eutelsat Quantum and Konnect Africa. The Konnect Africa project is said to remain in ramp-up mode with a strong focus on Nigeria, Congo and Ivory Coast. Management has not provided any subscriber targets or data.

Eutelsat also took the opportunity to update analysts on its C-Band thinking. The bank says: “Management believes the FCC is of the view that it cannot expropriate nor spoil satellite operators. The key question is how much of C-band proceeds will flow back to the satellite companies. On timing, Eutelsat expects the FCC to take an initial decision early next year but to seek further comments on how to organise the auction and the transition.”

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