Investment bank Exane/BNPP followed up Eutelsat’s end-of-year results with a note to clients praising the satellite operator’s “solid Q4 revenue performance”.
The bank’s satellite analyst Sami Kassab welcomed Eutelsat’s improving volume trends in Fixed Data and Maritime as well as one-off benefits in Government.
“The bread and butter Video business was in line,” said Kassab.
The bank maintained its ‘Neutral’ advice but marked down Eutelsat’s target share price by €1 to €10. This is markedly different from Deutsche Bank’s July 31st report on Eutelsat which recommended a “Buy” for the company’s shares and with a share price target of €18.50.
Kassab, although cautious on Eutelsat’s important Video division (which he expects to be slightly down in the upcoming financial year), is nevertheless bullish on what he describes as a “major strategic shift in fixed broadband”.
Kassab says: “Largely because of distribution issues Eutelsat has so far largely failed to deliver on the promise of satellite-based consumer broadband. With the £38 million acquisition of Bigblu Broadband the group takes control of its capacity distribution and enters the broadband retail market. We believe this should help accelerate subscriber growth at a cost of lower margins.”
He also warns about the number of “false starts” suffered by Eutelsat in broadband. “The road to balancing the group revenue mix (more structurally appealing Connectivity revenues, less Video) is still long and challenging.”
Rival SES will unveil its numbers on August 7th.