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Eutelsat cautiously optimistic on outlook

June 23, 2020

Eutelsat’s CEO Rodolphe Belmer, speaking at the Exane/BNPP-organised CEO Conference in Paris, painted a cautiously optimistic view for the medium-term outlook for the satellite operator.

Belmer said he continues to expect its Video Broadcast division (62 per cent of group FY20e revenues) revenues to be broadly stable and to benefit from lower replacement capex. Once the HotBird replacement is completed in 2021, Eutelsat then has limited maintenance capex for Video Broadcast until FY 28.

He added that the resilience of Video Broadcast’s Free Cashflow generation should help the group protect its dividend in the medium to long term.

The Covid-19 pandemic is likely to have a negative impact on Aviation revenues in FY21 but its impact on Maritime is likely to be short term as satellite capacity demand is recovering rapidly in Eutelsat’s key maritime markets (shipping, ferries, fishing). Covid-19 is having no visible impact on the US Department of Defense tender activity but it is slowing down new business activity across the group.

According to Exane/BNPP Eutelsat’s New Business accounts for c5 per cent of annual group revenues.

“Eutelsat management continues to argue that horizontal industrial consolidation would drive value creation and bring much needed scale to compete with new entrants. The public-private partnership between Space X and the US administration could facilitate the European Union’s and local government’s acceptance of the creation of a European champion in satellite communications,” Belmer said.

“On C-band, Eutelsat is very confident that its migration risks are extremely limited and the probability of earning USD510m of C-band payment is very high. Payments beyond the FCC’s Order could happen if the FCC were to authorise satcos to make a profit margin on migration costs or if Verizon and other telcos agreed to pay additional fees for a faster clearing process (unlikely before December 8th),” said the bank’s summary of the event.

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