Eutelsat confirms guidance
February 14, 2020
By Chris Forrester
Paris-based Eutelsat has not enjoyed the best press comments this past few weeks with one investment bank downgrading its view on the satellite operator’s prospects.
As if to counter that negativity Eutelsat delivered a robust response, stressing that that it is achieving “industry leading” level of profitability with an EBITDA margin of 78 per cent, and contrary to some reports would be maintaining shareholder remuneration over the long term.
“In recent months we have made strong progress on the development of our future growth levers with the successful launch of EUTELSAT KONNECT, bringing new resources over Africa and Europe and marking a milestone in our Connectivity strategy, as well as the procurement of EUTELSAT 10B with firm commitments on a third of the HTS capacity, highlighting robust demand in the mobility market,” said CEO Rodolphe Belmer in the operator’s half-year results statement.
“Looking ahead, the remainder of the year will benefit from several revenue tailwinds, notably the EGNOS payload on EUTELSAT 5 West B and the availability of incremental capacity on EUTELSAT 7C, leading us to reaffirm our revenue target for FY 2019-20 as a whole. All other elements of the financial outlook are also confirmed, notably our FY 2021-22 cash-flow target providing ample dividend cover. Moreover, by FY 2022-23, the bulk of our capacity renewal cycle will be complete, giving us increased flexibility to support cash generation and attendant shareholder remuneration over the long term,” Belmer added.
Eutelsat reported 1H revenues of the Operating Verticals down 4.9 per cent like-for-like year-on-year, with an improvement in trend in the Second Quarter (-3.7 per cent) versus the First (-6.2 per cent) and a stabilization in revenues quarter-on-quarter. Revenue objectives are confirmed for FY 2019-20.
At December 31st 2019, the total number of channels broadcast by Eutelsat satellites stood at 6,879, down 2.7 per cent year-on-year. HD penetration continued to increase, standing at 1,605 channels versus 1,500 a year earlier (+7 per cent), implying a penetration rate of 23.3 per cent up from 21.2 per cent a year earlier.
The number of operational transponders at December 31st 2019 stood at 1,387, down by 32 units year-on-year, principally reflecting the end of life in stable orbit of Eutelsat 12 West B. They were unchanged versus end-June 2019.
Eutelsat’s overall fill rate stood at 69.7 per cent compared to 68.3 per cent a year earlier and 69.2 per cent at end-June.
The order backlog stood at €4.3 billion at December 31st 2019 versus €4.6 billion a year earlier and €4.4 billion at end June 2019. It includes the capacity commitments secured on the recently ordered Eutelsat 10B satellite. The backlog was equivalent to 3.3 times 2018-19 revenues. Broadcast represented 68 per cent of the backlog.
On January 30th 2020, Eutelsat acquired the minority interests of its Russian operations for a cash consideration of €34 million. They consist of 49 per cent of Eutelsat International and Eutelsat Networks which market capacity on the Express-AT1, ExpressAT2 and Eutelsat 36C satellites for a total of 38 Ku-band transponders and 18 Ka-band spotbeams. The transaction carries an earn-out feature to be settled between September 2020 and September 2023, says Eutelsat.