Orange’s Eutelsat order examined
July 24, 2020
July 22nd saw Eutelsat announce that French telco Orange had taken all of the available capacity targeting France on Eutelsat’s current ‘Konnect’ satellite.
Sami Kassab, an equity analyst at investment bank Exane/BNPP, says that while neither party disclosed the size or value of the contract the deal was likely to involve 5-10Gb/s of High Throughput Satellite (HTS) Ka-band capacity, probably enough to serve c100,000 customers.
“We also note that in 2015 Eutelsat (and Facebook) paid an estimated $19 million per annum (over 5 years) for 18 Gb/s of similar capacity on Amos 6. We believe that since then industry prices have fallen significantly and that this new deal is likely to bring a mid-single digit type of revenues from 2021 onwards,” says Kassab.
Orange plans to migrate the installed base of customers from this current Eutelsat Konnect craft to Eutelsat’s new Konnect VHTS when this new satellite starts operations in 2022.
“This new contract marks further progress on the group’s Fixed Broadband strategy and follows a significant contract won with the government of Congo to provide satellite-based internet services to over 3000 local schools earlier this year. Eutelsat Fixed Broadband strategy is progressing well. But we remain cautious on profitability impact that a step-up in subscriber acquisition costs could have in Fixed Broadband,” adds Kassab.
Eutelsat will unveil its full-year results (to June 30th) on July 31st.