UAE satellite operator Yahsat’s revenue for the first half of 2023 has been stable at AED 753m ($205m) whilst EBITDA and net income increased, on a normalised basis, by 3% versus the prior year to AED 460m ($125m) and 5% to AED 175m ($48m), respectively.
Yahsat delivered revenue growth in Infrastructure, the group’s largest segment providing communications capacity to the UAE government, and Data Solutions, offering satellite-based broadband data solutions. Managed Solutions, providing complete value-added satellite communications solutions primarily to the UAE government and related entities, maintained revenues versus an exceptionally strong prior year. Mobility Solutions, the Thuraya business providing mobile satellite services using the L-band spectrum, recorded strong double-digit growth in the second quarter of 12% versus the prior year, driven by higher equipment sales, a trend that is expected to continue into the Q3 and help achieve revenue growth for that segment by the end of the year.
As of June 30, 2023, the group’s contracted future revenue remained strong at $1.9bn, equivalent to around 4.4 times last-twelve-month revenue.
An improved cash generation with a Discretionary Free Cash Flow of AED 296m ($82m), up 34% versus the prior year.
A historically strong balance sheet with negative Net Debt of more than AED 454m ($125m) total available liquidity of AED 2.3bn ($686m) and long-term visibility of future cash flows, supports Yahsat’s future investment in organic growth (Al Yah 4 and Al Yah 5) and opportunistic acquisitions, without impacting its attractive progressive dividend policy.
On track to grow full year 2023 dividend by at least 2% to 16.46 fils [4.48 US cents] per share or AED 402m ($109m) – based on the last closing share price, this implies an annualised dividend yield of over 6%, amongst the highest offered by UAE listed stocks.
Guidance for full-year revenue, EBITDA, and Discretionary Free Cash Flow remains unchanged, whilst guidance for cash capex and investments is increased to a range of AED 643-716m ($175-195m) from AED 569-643m ($155-175m), to reflect the commencement of the Al Yah 4 and Al Yah 5 satellite procurement programme.
Commenting on the revenue, Ali Al Hashemi, Group Chief Executive Officer of Yahsat, said: “Yahsat continues to improve its business operations and profitability, and we remain focused on growing both our core government business and commercial segments, whilst controlling and optimising costs across the group.
“In addition to completing the Thuraya-4 NGS satellite procurement programme, which remains on track to be launched in the first half of 2024, we have signed an Authorization-to-Proceed (ATP) with Airbus, a long-time partner of Yahsat, to commence initial activities relating to the procurement of the Al Yah 4 and Al Yah 5 satellites. In parallel, we are in advanced negotiations with the UAE government to secure a long-term contract that would significantly increase and extend our backlog of contracted revenues beyond 2040.
“We have also commenced work on establishing a formal partnership with Bayanat to offer Earth Observation (EO) capabilities using, in the first phase, synthetic aperture radar (SAR) technology, which provides higher resolution data than conventional sensors. This partnership aims to develop a constellation of five satellites, with the first satellite expected to be launched in the first half of 2024, which will further diversify our current portfolio of fixed and mobile satellite communication services from GEO orbits and expand it to include Earth observation services from LEO orbits.
“The satellite industry continues to witness substantial investments and the development of new business models. Together, these forces are driving industry consolidation and the necessary emergence of larger and stronger players. Yahsat remains in a strong position to take advantage of these developments, underpinned by our unique backlog of future revenues and our historically strong and robust balance sheet.”
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