Eutelsat confirms Nilesat relationship

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Eutelsat has unveiled its Q1 revenues – the final set of numbers before Rodolphe Belmer’s departure from the business. The financials were not good.

Each and every division showed falling revenues. Its all-important contracted backlog also fell €200 million y-o-y to €4.2 billion. The good news, such as it is, is that Eutelsat has firmed up a curious “limited” contract with its long-term partner Nilesat. The two operate the 7/8 degrees West orbital slot. The Nilesat relationship was due to be renewed back in the summer, but better late than never.

Indeed, the consensus is that the Nilesat renewal covered about half of the previous contract. Eutelsat says it now has “Multiple agreements” including multi-year, multi-transponders contracts with the UAE’s Du, the important Jordan Media City and Abu Dhabi Media.

“Management has argued [that Nilesat] is in line with their FY22 guidance. Eutelsat plans to have resold most of the capacity returned by the end of FY23. It has already been able to resell part of this capacity on double-digit price increases in three agreements in the Middle East,” says Sami Kassab, media analyst from investment bank Exane/BNPP.

Some of the numbers are not within Eutelsat’s control. For example, the US troop withdrawals from Afghanistan means a lower military demand for connectivity in the region. This resulted in Eutelsat only seeing a 75 per cent renewal of their previous contracts with the military.

Eutelsat announced October 28th a c€30 million annual deal with Hispasat on Eutelsat Konnect. This comes on the heels of a distribution agreement with Deutsche Telekom in Germany and underpins the view that Fixed Broadband is making solid progress.

The divisional numbers (as reported) are y-o-y:

Broadcast                            Down 6.8 per cent

Data/Prof.Video               Down 2.8 per cent

Gov’t Services                   Down 3.6 per cent

Fixed Broadband              Down 28.8 per cent

Mobile                                  Down 3.4 per cent

Overall                                 Down 7.1 per cent

Despite these disappointments, Belmer said that the operator’s Q1 revenues “are in line with our expectations”.

Eutelsat says it is on track to receive the first slice of its FCC ‘incentive’ payment for clearing key C-band frequencies over the US. The sum, $125 million, will be followed by a second tranche of $382 million later in 2023.  SES and Intelsat are also in for significant FCC payments.


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