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Bank: “Eutelsat not out of the woods yet”

February 20, 2024

Investment bank BNP/Paribas, in its review of Eutelsat’s half-year results, praised the satellite operator saying it was making “good progress” and reducing its balance sheet risks, but warned it “is not out of the woods yet”.

BNPP, in its note to clients, stated: “While we remain cautious on the shares in the context of management withdrawing its FY25 guidance as well as refinancing and investment requirements (hence our Underperform rating), we see some positive short-term catalysts ahead (IRIS², improving H2 revenue trends in Video and Connectivity) and increase our target share price to €3.5 {from €3] on largely unchanged revenue and EBITDA forecasts.”

As to Eutelsat’s OneWeb division, the bank said: “OneWeb commercial success remains solid despite delays in ground network roll out. OneWeb backlog grew 23 per cent over the previous quarter to €700 million (excl. intra company agreements) with commercial successes with Telstra in Australia and Airbus amongst others. This came despite the recently announced delays in the ground network deployment. OneWeb is delivering a solid customer experience with latency of 70 milliseconds and download speeds of about 200 Mb/s. 30 of the 43 required gateways have been rolled out. Management expects to be close to 40 by July.”

“Management has reduced its capex guidance from a 5y average of €725-875 million to €600-700 million. We estimate this implies a c. €700-800 million in Gen 2 total capex envelope and c1x reduction in Net debt to EBITDA. We believe it reflects a more progressive approach to OneWeb Gen 1 upgrade. As discussed [earlier] we believe that protecting the balance sheet is positive for the equity value of the group. We note management comment of incremental cost synergies as another positive,” added the bank’s report.

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