Analyst Report News Operators Satellite

Yahsat reports strong growth in revenue for Q3 2023

Yahsat's anticipated future revenue surged to $6.9bn, which is 15.7 times its revenue from the last 12 months, marking a significant increase from the figures at the end of 2022.

UAE-based satellite operator Yahsat has announced impressive financial results for the first nine months of 2023, concluding in September. The company’s revenue and normalized EBITDA exhibited a robust 3% growth compared to the previous year, reaching AED 1.2bn ($323m) and AED 713m ($194m), respectively.

Yahsat reported that its Net Income more than doubled, while Normalised Net Income remained in line with the prior year period, standing at AED 274m ($75m). These positive financial figures can be attributed to Yahsat’s strong performance in various segments of its business.

Mobility Solutions, which provides mobile satellite services through the Thuraya brand, witnessed a remarkable revenue growth of 22% during the nine-month period and a staggering 81% growth in Q3, driven by increased equipment sales and service revenues.

The Infrastructure segment, Yahsat’s largest, continued to show steady year-on-year revenue growth of 1%. Managed Solutions, the second-largest segment, faced slightly lower revenues due to a strong comparative period but remains well-positioned to achieve full-year revenues in line with or better than the previous year. Data Solutions, offering satellite-based broadband data solutions, reported marginally lower revenues due to fewer equipment sales but showed significant improvement in underlying operating profitability.

Yahsat’s contracted future revenue soared to AED 25.3bn ($6.9bn), equivalent to 15.7 times the last 12-month revenue, representing a substantial increase from year-end 2022 figures.

The company secured its largest-ever government mandate, valued at AED 18.7bn ($5.1bn), for satellite capacity and managed services, with AED 3.7bn ($1bn) set to be received in advance.

Yahsat maintained a strong cash generation, with Discretionary Free Cash Flow reaching AED 627m ($171m), offsetting the lower figure from the previous year caused by the reimbursement of advance payments to the UAE Government (approx. $75m per annum starting 2023) previously received during the construction phase of the AY1 and AY2 satellites. This was largely offset by improved collection of receivables.

The company boasted a historically strong balance sheet with record negative Net Debt of more than AED 583m ($159m) and total available liquidity of AED 2.6bn ($71m). Yahsat’s long-term visibility of future cash flows up to 2043 supports its investment in organic growth and opportunistic acquisitions, all while maintaining its progressive dividend policy.

Additionally, Yahsat reported a positive net finance income of AED 36m ($10m) due to higher interest rates on short-term deposits.

The company is on track to increase its full-year 2023 dividend by at least 2%, reaching 16.46 fils (4.48 US cents) per share, or AED 402m ($109m) based on the last closing share price, offering an annualised dividend yield of over 6%, one of the highest among UAE listed stocks.

Yahsat’s guidance for full-year revenue, EBITDA, and cash capex and investments remains unchanged, with the Discretionary Free Cash Flow range increased to AED 514-58m ($140-160m) from AED 477-550m ($130-150m).

Ali Al Hashemi, Group Chief Executive Officer of Yahsat, commented: “The third quarter has been one of several historic achievements which reinforce the company’s future growth trajectory. Our reported revenue growth for the nine-month period underpinned by one of the strongest third quarters on record has resulted in improved financial guidance for 2023 and means that we are well-positioned to record our strongest-ever performance for the full year. Our financial position with record low leverage has never been stronger and continues to support our attractive progressive dividend policy. The construction of the Thuraya-4 NGS satellite remains on track for launch in 2024 and entry into service in H1 2025, with new advanced capabilities that will allow us to offer additional applications to our customers. Our largest ever contract award during the quarter – an AED 18.7bn ($5.1bn) satellite capacity and managed services mandate from the UAE Government that includes the procurement of two new satellites, Al Yah 4 and Al Yah 5, has propelled our contracted future revenues to an all-time high and will support our core government business going forward whilst securing significant predictable cashflows all the way out to 2043.

“This is a very exciting time for Yahsat. These achievements continue to differentiate our investment case amongst regionally-listed peers and within the global satellite industry, which continues to witness significant transformation. We remain in a strong position to take advantage of value accretive opportunities, underpinned by our unique backlog of future revenues and our historically strong balance sheet.”