Eutelsat still suffering Video revenue challenges
May 13, 2022
By Chris Forrester
Eutelsat revealed its Q3 financials after the market closed on May 12th. Its financial year ends on June 30th. The Broadcast division’s quarterly revenues fell back 6.8 per cent y-o-y to €172.5 million (from €182 million); Broadcast is 61 per cent of the company’s revenues.
The problems in Russia were covered by the company. The operator said: “Eutelsat derived circa 6.3 per cent of its revenues from Russian customers in Fiscal Year 2020-21 and has no material revenue exposure to Ukraine. The Group also leases capacity on four satellites owned by the Russian operator, RSCC, serving mostly the above-mentioned Russian customers and representing a net present value (included in Net Financial Debt) of €322 million as of 31 December 2021.”
It added: “Consistent with its Code of Ethics and as a provider of infrastructure globally Eutelsat upholds a commitment to neutrality and is therefore guided by sanctions and by the decisions of its competent regulatory bodies, which it strictly applies. In this context, Eutelsat immediately implemented EU Council Regulation 2022/350, suspending the broadcasting activities of Russian television stations such as Russia Today.”
Eutelsat’s Government Services division (12 per cent of revenues) also suffered a quarterly drop of 11.3 per cent to €34.6 million and not helped by the reduction of military services in Afghanistan.
But there were two much brighter – and fast growing – segments. Its Fixed Broadband division enjoyed 30.2 per cent growth while Mobile Connectivity rose 24.5 per cent.
Eva Berneke, CEO of Eutelsat, said: “The Third Quarter saw robust delivery, with an improvement in Broadcast trend and strong double-digit growth in both Fixed Broadband and Mobile Connectivity whereas Government Services inevitably reflected the geopolitical environment in the Middle East.”
The trend in Broadcast revenues from Q2 to Q3 were almost stable (-0.8 per cent) which could reflect well in the end-of-year numbers.
“The Broadcast revenue decline reflected predominantly the effect of the partial renewal of capacity with Nilesat at 7/8° West, which is not offset by the resale of this capacity, and elsewhere, a slight erosion in the underlying business in Europe,” said Eutelsat.
Berneke also said that Eutelsat’s important QUANTUM satellite had fully sold six of its eight beams and she expected the satellite to be fully sold out in the next few months. Overall, while the comparisons with its trading a year ago, the more recent quarter-on-quarter positions for the revenues of Eutelsat’s five key Operating Verticals were down by 0.7 per cent on a like-for-like basis.
Eutelsat confirmed the end of stable life of Eutelsat 174A. It will continue to be operated in Inclined orbit. The move means a reduction in the number of transponders in the fleet is now 1,358 and with an overall fill rate of 70.7 per cent (the equivalent of 961 transponders).
The decline in business activity and a trend towards shorter contract lengths means a commensurate reduction in the company’s contracted backlog from €4.5 billion to €4 billion year-on-year (and €4.2 billion as at December 31st 2021).
Revenues for the first nine months of Eutelsat’s financial year stood at €859 million, down by 7.6 per cent on a reported basis and by 4 per cent at constant currency.
On the back of the performance of the first Nine Months, Eutelsat confirmed its objective for the Full Year of Operating Vertical Revenues of between €1,110 to €1,130 million.
Eutelsat confirmed its policy of a “stable to progressive” dividend to shareholders which will be paid in November.