Bad news is good news for Eutelsat shares

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The Paris bourse share market responded exceptionally well to the potential bad news of Rodolphe Belmer’s departure from Eutelsat.

In early trading Eutelsat’s share price rose a full 1 percent in early trading to €12.60 and matching its recent peak of €12.60 at the height of the Patrick Drahi unsolicited €3.2 billion take-over bid, and by any measure the best position in terms of share price this year. Drahi heads up the Altice telco conglomerate.

The consensus is that Belmer’s decision to quit came as something of a surprise to Eutelsat’s board. Sami Kassab, a media analyst at investment bank Exane/BNPP, in comments to its clients said: “The statement that ‘the process of recruiting a successor will begin immediately’ coupled to the fact that Atos announced Mr Belmer as new CEO before Eutelsat commented on his departure suggest that Mr Belmer’s decision may have come as a surprise and might not have been anticipated by the company.”

Kassab added: “What appears as a prompt departure raises many questions: Should this be put in the context of Mr Patrick Drahi’s recent takeover bid for Eutelsat? Is it reflective of challenging industry trends and of a lower confidence level in the ability to turn the revenue trajectory around? Mr Belmer has delivered a solid performance in terms of cost cutting, capex reduction, Free Cashflow generation, and capital allocation but in a structurally challenging industry he also had missed revenue forecasts repeatedly.”

Belmer will report on Eutelsat’s full-year progress on October 27th, and where investors and the market might hear more about key recent investments in projects such as OneWeb where Eutelsat invested earlier in October a further $165 million – on top of its initial $550 million – in order to be the second-largest stake-holder (22.9 per cent) in OneWeb. OneWeb is now more than half-way to completing its constellation of 648 low Earth orbiting satellites.

Belmer also supervised the past two years of the company’s LEAP cost-cutting exercise which included the relocation of its Paris headquarters and the trimming of staff.


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