Eutelsat Reports Revenues Down in 1Q 2019

Paris, France, October 30, 2019–Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL) reports revenues for the First Quarter ended 30 September 2019. First Quarter revenues of the Operating Verticals of €316.5 million, down 6.2% like-for-like , (ie, at constant currency and perimeter).

Revenues of the five Operating Verticals (ie, excluding ‘Other Revenues’) stood at €316.5 million. They were down by 6.2% on a like-for-like basis excluding a negative perimeter effect of c.0.5 points (disposal of the stake in EUTELSAT 25B in August 2019) and a positive currency effect of c. 1.5 points. Quarter-on-quarter, revenues of the five Operating Verticals were down by 3.7% like-for-like.

Broadcast (62% of revenues) First Quarter revenues amounted to €194.7 million, down 1.7% year-on-year. This reflected notably the termination of a contract in Sub-Saharan Africa and the temporary effect of the return of a couple of transponders in Russia. None of these elements alter our view of Broadcast as a fundamentally resilient business. On a quarter-on-quarter basis, revenues were down by 2.0%.

At 30 September 2019, the total number of channels broadcast by Eutelsat satellites stood at 6,976, down 0.3% year-onyear. The number of HD channels stood at 1,582 versus 1,419 a year earlier, up by 11.5% and represented 22.7% of channels compared to 20.3% a year earlier.

On the commercial front, two multi-year, multi-transponder contracts were signed with Orby TV for capacity on EUTELSAT 117 West A for the launch of a new DTH service across the United States, and with Ultra DTH for capacity on EUTELSAT 65 West A to support the deployment of a white-label DTH platform across the Caribbean and Andean regions.

Broadcast revenues should benefit from the entry into service of EUTELSAT 7C at the end of calendar year 2019, bringing incremental capacity (19 36-Mhz equivalent transponders) to the African broadcast market.

Data & Professional Video (14% of revenues) First Quarter revenues stood at €43.0 million, down by 19.6% year-on-year. They continued to reflect the ongoing pricing pressure and highly competitive environment in this application, and were also affected by volume losses in Data in Latin America and lower occasional use.

In Professional Video. Quarter-on-quarter, revenues were down by 11.8%. 3 Subject to availability of the payload on EUTELSAT 5 West B. 4 The share of each application as a percentage of total revenues is calculated excluding “other revenues”. 

Government Services (12% of revenues) First Quarter revenues stood at €39.3 million, down 10.7% year-on-year, reflecting the carry-forward of the non-renewal of a single sizeable contract with a service provider in the first quarter of fiscal year 2018-19. On a quarter-on-quarter basis, revenues were down by 1.7%.

The latest round of contract renewals with the US Government (Fall 2019) resulted in an estimated renewal rate of circa 90% in value. Trends will benefit from an easing comparison base from the Second Quarter onwards. Subject to the availability of the payload on EUTELSAT 5 West B, they will also benefit in the second half from the contribution of the GEO-3 payload of the European Geostationary Navigation Overlay System (EGNOS), under a 15-year agreement with the European GNSS Agency (GSA).

Fixed Broadband (6% of revenues) First Quarter revenues stood at €19.9 million, down 3.3% year-on-year. Revenue trends in Europe are improving, reflecting the continued roll-out of the PPP program (Preferred Partner Programme) which is gradually being extended to new countries. The contribution of African Broadband remains modest at this stage, but is expected to ramp throughout the year. Quarter-on-quarter, revenues were down by 4.8%, with the fourth quarter of fiscal year 2018-19 including a positive one-off related to the sale of terminals.

Mobile Connectivity (6% of revenues) First Quarter revenues stood at €19.7 million, down 7.8% year-on-year. They reflected mostly a negative one-off of circa €1m related to the timing of revenue recognition which will be caught up next quarter. Other effects include notably the carryforward impact of the end of a temporary wide-beam contract on EUTELSAT 172B in FY 2018-19 offsetting the contribution of UnicomAirNet from January 2019. Revenues were down by 4.4% quarter-on-quarter. Trends are expected to improve throughout the year on the back of the gradual materialisation of the pipeline and ramp-up of Maritime business.

Other Revenues. Other revenues amounted to €1.1 million in the First Quarter versus €1.2 million a year earlier and (€1.7) million in the Fourth Quarter last fiscal year. They included a negative (€1.7) million impact from hedging operations.