Eutelsat: Still waiting for revenue progress
July 26, 2022
By Chris Forrester
Eutelsat’s full-year 2021-2022 results were inevitably overshadowed by the news of its “transformational” merger plan with OneWeb. The headline was a statement that the company expects to return to top-line growth in its full year’s trading during 2023-2024.
However, in terms of hard cash, almost all of Eutelsat’s key divisional verticals were in negative territory this past year. Its ‘Broadcast’ segment fell back 6 per cent, while ‘Government Services’ fell 4.6 per cent. ‘Fixed Broadband’ tumbled 14.3 per cent. ‘Data & Professional Video’ fell 1.8 per cent, while ‘Mobile Connectivity’ was a star performer and up 18.9 per cent.
These negatives and positives combined to show a decline overall of -4.4 per cent (€1.1516 billion compared with €1.2339 billion the year previous).
Eutelsat’s all-important backlog fell back by 7.5 per cent (from €4.4 billion to €4 billion).
Eva Berneke, CEO at Eutelsat, said: “We delivered a robust performance in FY 2021-22 with revenues slightly above the mid-point of our guidance range, a stable industry-leading profitability and a continued strong free cash flow generation which is well above our range of objectives. Importantly, Fixed Broadband and Mobile Connectivity businesses have delivered double-digit growth highlighting their long-term potential whereas our Broadcast business has shown an improvement in trend in the second semester. In parallel, all the components necessary to foster our Telecom Pivot are gradually being put in place, including a new organisation, an integrated platform and adequate in-orbit resources which will enable us to address the massive long-term connectivity opportunity.”
Eutelsat’s operational transponders stood at 1,361 (down 16), with 996 off them described as being utilised, and therefore a ‘fill rate’ of 73.2 per cent (71.2 per cent a year ago).
At June 30th 2022, net debt stood at €2.814 billion, a €159 million increase versus end of June 2021. It mainly reflected, on one hand, the €443 million reported Discretionary Free Cash Flow and the first instalment of C-Band proceeds net of tax of €86 million, and on the other, the dividend payment of €222 million.
Eutelsat said it expects its Broadcast revenue trend to improve materially in FY 2022-23 relative to FY 2021-22 (-6.9 per cent). Nevertheless, while the impact of the Nilesat headwind will wash out from mid-October 2022, revenues will be negatively affected by the anticipated non-renewal of the capacity contract with Digitürk, leading to an overall mid-single digit decline for this application.
Data & Professional Video revenue trend in FY 2022-23 will remain largely in keeping with the mid-single digit decline trend reported in FY 2021-22 (-4.2 per cent).
Looking further into the future obviously depends on progress on the OneWeb segment of the business. This will not be consolidated for another year but work is already being undertaken in terms of OneWeb’s ‘Generation 2’ satellites with lower costs/gigabit and higher capacity on the new version satellites. Eutelsat expects average synergies of some €150 million by Year 4 of the new relationship.