Eutelsat has reported that its total revenues for FY 2018-19 stood at $1,472m (€1,321m) down by 5.0%.
Revenues of the five Operating Verticals were down by 3.1% on a like-for-like basis. This is owing to the disposal of the stake in EUTELSAT 25B and the acquisition of Noorsat.
Q4 revenues stood at $363m (€326m), down 11.4%. Revenues of the five Operating Verticals stood at $365m (€328m), down 3.5% year-on-year and up by 0.6% quarter-on-quarter on a like-for-like basis.
Commenting on the company’s performance, Rodolphe Belmer, CEO of Eutelsat Communications said: “On the operational front, the past year was notable once again for the resilience of core Broadcast, supported by rising channel count and HD penetration. The successful launch of EUTELSAT 7C will bring incremental capacity to the dynamic African market. In Fixed Broadband, our Konnect Africa operations are now up and running and our new distribution strategy in Europe is starting to bear fruit. In Mobile Connectivity, we have carved a strong foothold in the maritime segment with some major commercial wins.”
He added: “In the context of a challenged operating environment which continues to weigh on the revenues of our core businesses, the effective execution of our financial strategy has enabled us once again to meet or exceed all our other financial objectives with, notably, a record level of EBITDA margin supported by the successful completion of our LEAP 1 cost-savings plan, and the attainment of our Net debt / EBITDA target. By leveraging all elements of cash-generation, we produced a further strong rise in Discretionary Free-Cash-Flow, enabling us to exceed our target a year early.”
“Our efforts remain focused on maximising cash generation, with the two recent successful bond issuances reducing interest by circa $37m (€34m) per annum, the reduction of over $78m (€70m) in our annual tax burden, and a follow-on cost-savings programme aimed at generating additional savings of $22m to $33m (€20m to 25m) by FY 2021-22. We are setting a new Discretionary free cash flow target with an objective of circa $557m (€500m) in FY 2021-22, and enhancing our remuneration policy by maintaining our dividend at $1.42 (1.27 euros) per share and committing to a share buyback program of at least $112m (€100m) by end-June 22.”
Other highlights included the launch of Eutelsat 7C and the launch of its Cirrus satellite and OTT turnkey service as well as seeing its Konnect Africa service which was now up and running.
The company sold Eutelsat 25B for a benefit of $150m (€135m) as it was “non-core”.
Belmer also addressed ongoing Capex optimisation “with anticipated replacement of HOTBIRD constellation at significant cost reduction.” He also announced a $111m (€100m) share buy-back programme spread over the next three years.
Overall revenues of $1.5bn (€1.39bn) (down 5%) with Video down 2.3%; Government services up 2.3%; Fixed data down 11.4%; Fixed broadband down 4.6% and Mobile connectivity up 7/9%.
Video applications, which make up 66% of Eutelsat’s revenues was positive. On 30 June 2019, the total number of channels broadcast by Eutelsat satellites stood at 7,092 up 2.4% year-on-year (+3.9% excluding the disposal of EUTELSAT 25B). HD penetration continued to increase, standing at 1,551 channels versus 1,455 a year earlier (+6.6%), implying a penetration rate of 21.9% compared to 21.0% a year earlier.
In FY 2019-20, Government Services revenues will benefit from the contribution of the EGNOS payload on the EUTELSAT 5 WEST B satellite. On the other hand, a delay in the launch of EUTELSAT QUANTUM means it will not contribute to revenues in the coming year.
From FY 2019-20 Fixed Data will be known as ‘Data and Professional Video’. This vertical is expected to continue to decline in the coming year.
Fixed broadband which makes up 10% of Eutelsat’s revenues was down 5.6% like-for-like. Revenues for Konnect Africa were modest following temporary and unconnected roll-out issues in several countries. With the direct distribution model now in place in DRC and the strong market potential confirmed, conditions are met for a progressive revenue ramp-up in FY 2019-20 for Konnect Africa, while European Broadband should also see an improved trend with the continued roll-out of the PPP.
Mobile connectivity has been up and in 2019-20, it will benefit from the full-year contribution of the UnicomAirNet contract as well as the contracts signed this year with Speedcast and Marlink in maritime Mobility.
With regards to operational and utilised transponders, the number of operational transponders as of 30 June 2019 stood at 1,387 down by 40 units year-on-year, principally reflecting the disposal of Eutelsat 25B and the end of life in stable orbit of Eutelsat 12 West B (satellites in inclined orbit are not included in the transponder count).
The number of utilised transponders stood at 960, down 11 units year-on-year on a reported basis and down three units excluding the disposal of Eutelsat 25B, with the end of life in stable orbit of Eutelsat 12 W B being almost offset by the ramp-up of maritime business.
As a result, Eutelsat’s fill rate stood at 69.2% compared to 68.1% a year ago.
As of 30 June, 2019, the backlog stood at $4.9bn (€4.4bn), down 4.9% compared to June 30th, 2018.
This reflected notably the negative impact of the disposal of Eutelsat 25B and the adoption of IFRS 15 as well as natural backlog consumption in the absence of material Video renewals, which more than offset the inclusion of future revenues related to commitments from Orange and Thales on KONNECT VHTS as well as the new maritime contracts.
Looking forward, 2019-20 revenues will benefit from several tailwinds, notably: In Video, EUTELSAT 7C entry into service and bringing incremental capacity in Africa and the resilience of the core Broadcast Direct-to-Home business; in Fixed Broadband, the ramp-up of the Konnect Africa operations and the benefits of the PPP in Europe; in mobile connectivity, the benefit of contract wins in maritime and the full-year impact of the UnicomAirNet contract on EUTELSAT 172B; In Government Services, the entry into service of the EGNOS payload on Eutelsat 5 WEST B.
On the other hand, a delay in the launch of EUTELSAT QUANTUM (now expected in Q3 of 2020) means this satellite will not contribute to revenues in the coming year, leaving the topline of Professional Video and Fixed Data under pressure.
In this context, Eutelsat expects revenues for the Operating Verticals of between $1,426m (€1,280m) and $1,471m (€1,320m) in FY 2019- 2012. Given the elements listed above, the revenue profile will be back-end loaded. Future revenues will benefit from the entry into service of Eutelsat Quantum, KONNECT and KONNECT VHTS, with an improving trend in the outer years.
Cash Capex13 will continue to be contained at an average of €400m per annum for the period July 2019 to June 2022.
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