Eutelsat Reports Slight Decrease in Revenues in First Quarter 2020

Paris, France, October 29, 2020--Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL) reports revenues for the First Quarter ended 30 September 2020. The company reported Operating Verticals revenues of €307 million, down 1.9% like-for-like and total revenues down 0.7%. Backlog of €4.4bn, up 3% year-on-year.

Rodolphe Belmer, Chief Executive Officer of Eutelsat Communications, said: “Eutelsat has made a solid start to the year, with Operating Verticals revenues in line with expectations and a backlog of €4.4bn, up 3% year-on-year. Highlights of the First Quarter include the renewal of the Sky Italia contract at HOTBIRD, confirming the ongoing relevance of satellite in Western Europe, and significant steps in our Fixed Broadband strategy with the acquisition of Bigblu Broadband Europe ahead of the imminent entry into service of EUTELSAT KONNECT. This performance demonstrates the general resilience of our business to the current environment. Although the rate of new business in certain verticals, in particular in Broadcast, is slower than usual against the general operating backdrop, we have nevertheless produced a solid commercial outturn securing several new contracts and renewals on favourable terms. Based on this performance we confirm our financial objectives for the current year and subsequent year,” he added.

Total revenues for the First Quarter stood at €315.3 million down 0.7% on a reported basis and by 0.8% like-for-like.

Revenues of the five Operating Verticals (ie, excluding ‘Other Revenues’) stood at €306.7 million. They were down by 1.9% on a like-for-like basis excluding a negative currency effect of c. 1.2 points. Quarter-on-quarter, revenues of the five Operating Verticals were down by 1.3% like-for-like.

Broadcast (62% of revenues)

First Quarter Broadcast revenues amounted to €190.6 million, down 1.5% year-on-year, reflecting the impact from 1st July of the renegotiation of contract terms with Greece’s Forthnet. They include a positive one-off of circa €2m. On a quarter-on-quarter basis, revenues were down by 1.9%. At 30 September 2020, the total number of channels broadcast by Eutelsat satellites stood at 6,683, down 4% year-on-year. The number of HD channels stood at 1,739 versus 1,582 a year earlier, up by 10% and represented 26% of channels compared with 22.7% a year earlier. As a result, the Mbps consumption is stable year-on-year. On the commercial front, a multi-year agreement was reached with Sky Italia, Eutelsat’s largest broadcast customer for the renewal and consolidation of its capacity agreements at the HOTBIRD position, securing broadly stable revenues for Eutelsat in the medium term. While we are experiencing a broad slowdown in the pace of new business against the current operating backdrop, this quarter has seen the extension in duration of existing contracts with Russia’s Tricolor TV and with Azam TV in Sub-Sahara Africa and we secured new contracts with BluTV, for a new DTH platform in Brazil on EUTELSAT 65 West A, and with Switzerland’s Kabelio for a new DTH platform at the HOTBIRD orbital position.

Data & Professional Video (13% of revenues)

First Quarter revenues stood at €39.5 million, down by 6.2% year-on-year. Fixed Data revenues continued to reflect the ongoing pricing pressure and highly competitive environment, notably in Latin America, but benefited from improved volume trends with, in particular, the carry-forward effect of new business secured in MENA last fiscal year. Professional Video revenues were once again in decline on a year-on-year basis but Occasional Use, which was strongly affected by the Covid-related lockdown in the Fourth Quarter of last year, showed signs of recovery in September with the reinstatement of live sports events. Quarter-on-quarter, revenues were down by 4.2%. Government Services (12% of revenues) First Quarter Government Services revenues stood at €38.4 million, up 0.7% year-on-year. They reflected the contribution of the EGNOS payload on EUTELSAT 5 WEST B which more than offset the negative carry-forward effect of USG renewals last year. On a quarter-on-quarter basis, revenues were down by 5.8%, with the Fourth Quarter of last fiscal year including one-off revenues related to the temporary relocation of the EUTELSAT 7A satellite at 59° East. The latest renewal campaign with the US Government (Fall 2020) resulted in an estimated renewal rate of circa 80%.

Fixed Broadband (7% of revenues)

First Quarter Fixed Broadband revenues stood at €20.5 million, up 3.8% year-on-year, in a context where demand for high quality, ubiquitous and reliable internet connectivity is higher than ever. This reflects growth in Europe and across the Mediterranean basin with net additions in positive territory for the second quarter in a row, as well as higher terminals sales during the Summer period. Quarter-on-quarter, revenues were up by 10.6%. With the imminent entry into service of EUTELSAT KONNECT which will gradually ramp-up to full capacity by early 2021, this fiscal year will mark a turning point for Fixed Broadband, building on the recent wholesale agreement with Orange for the French capacity of the satellite and the acquisition of the European distribution operations of Bigblu Broadband. In Africa we have continued to progress on our go-to-market capabilities with notably the conclusion of a multi-year distribution agreement with Paratus to bring high quality network connectivity to South Africa.

Mobile Connectivity (6% of revenues)

First Quarter Mobile Connectivity revenues stood at €17.7 million, down 7.2% year-on-year. This reflected the impact of the Covid-19 crisis on Aero Mobility, weighing on airtime-related revenues on KA-SAT, and reducing revenues from certain service providers. Conversely, Maritime revenues grew further on the back of the ramp-up of contracts secured in the last couple of years. As a reminder, the First Quarter of last year included a negative one-off of circa €1m related to the timing of revenue recognition. Revenues were up 11.9% quarter-on-quarter. 

Other Revenues

Other Revenues amounted to €8.6 million in the First Quarter versus €1.1 million a year earlier and €2.3 million in the Fourth Quarter last fiscal year. They included a positive €2.4 million impact from hedging operations compared to a negative impact of (€1.7) million last year. On a commercial front, a long term agreement was signed with Ovzon AB for the provision by Eutelsat of satellite control services over the full operational life of the future satellite Ovzon-3 to be launched in the fourth quarter of 2021.