Eutelsat Q1 backlog up, but Broadcast slows

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Eutelsat’s Q1 numbers (to September 30th) showed that its revenues are still under pressure, although its contracted backlog at €4.4 billion – helped by a renewed Sky Italia contract – was up a reassuring 3 per cent y-o-y from €4.1 billion.

Only one of Eutelsat’s key vertical revenue divisions showed any growth (Fixed Broadband, up 3 per cent from €19.9 million to €20.5 million). All of the other, and more important, departments fell back.  Its all-important Broadcast revenue fell 2.1 per cent (from €194.7 million to €190.6 million) reflecting the impact from 1st July of the renegotiation of contract terms with Greece’s Forthnet.

Data & Professional Video fell 8.1 per cent. Mobile Connectivity fell 10.2 per cent, while Government Services fell 2.3 per cent.

The end result was an overall reduction of 3.1 per cent YoY from €316.5 million to €306.7 million. Nevertheless Eutelsat’s revenues came in slightly ahead (1 per cent) of consensus, which is good news.

Rudolphe Belmer, CEO was upbeat, saying: “Eutelsat has made a solid start to the year, with Operating Verticals revenues in line with expectations and a backlog of €4.4 billion, up 3 per cent year-on-year. Highlights of the First Quarter include the renewal of the Sky Italia contract at HOTBIRD, confirming the ongoing relevance of satellite in Western Europe, and significant steps in our Fixed Broadband strategy with the acquisition of Bigblu Broadband Europe ahead of the imminent entry into service of Eutelsat Konnect.”

Eutelsat highlighted the key news for the quarter, stating:

  • Sky renewal confirming the ongoing relevance of satellite broadcast in Western Europe
  • Extension of contract durations with Tricolor TV in Russia and Azam TV in Sub-Saharan Africa, new wins with BluTV and Kabelio
  • Slowdown in the pace of new business against current operating backdrop.
  • On July 31st, Eutelsat reached an agreement with Bigblu Broadband to acquire its European satellite broadband activities for a consideration of approximately £38 million. The transaction closed on 30 Sept 2020.

At September 30th, the total number of channels broadcast by Eutelsat satellites stood at 6,683, down 4 per cent year-on-year. The number of HD channels stood at 1,739 versus 1,582 a year earlier, up by 10 per cent and represented 26 per cent of channels compared with 22.7 per cent a year earlier. As a result, the Mb/s consumption is stable year-on-year.

The number of operational transponders at 30 September 2020 stood at 1,382 down by five units YoY. This reflected on one hand lower operational capacity at 5° West following the transfer of services from Eutelsat 5 West A to Eutelsat 5 West B in January 2020, and on the other hand, incremental capacity brought by Eutelsat 7C in January 2020. The number of utilised transponders stood at 966, unchanged on a year-on-year basis and up by six units quarter-on-quarter. As a result, the fill rate stood at 69.9 per cent compared with 69.7 per cent both a year ago and at end-June 2020.

The analysts delivered comments that could be summed up as “mixed”. Sami Kassab from Exane/BNPP said that Eutelsat’s management expected to return to top-line growth in 2023; “Management is going to increase its investments in the retail distribution of its European broadband business. Its retail prices are to run between €30-€70 for up to 100Mb/s and unlimited usage (as long as the satellite capacity permits). Net adds had their second consecutive quarter of y-o-y growth in Q1/2021.”

Giles Thorne from Jefferies said the Eutelsat results were “A dollop of ambition with a pinch of trepidation”. He described the results as “uneventful” although with a “nervous tilt to the near-term growth outlook”.

The “can Eutelsat grow again?” debate will remain for now, Thorne added.


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