Eutelsat Communications: Q3 and nine-month 2021-22 revenues

Eutelsat Communications reports revenues for the Third Quarter and Nine Months ended 31 March 2022.

Eva Berneke, Chief Executive Officer of Eutelsat Communications, said: “The Third Quarter saw robust delivery, with an improvement in Broadcast trend and strong double-digit growth in both Fixed Broadband and Mobile Connectivity whereas Government Services inevitably reflected the geopolitical environment in the Middle East. Recent months have seen meaningful progress on the commercial front in particular with the successful commercialization of EUTELSAT QUANTUM. Elsewhere, our global distribution agreement with OneWeb to address key connectivity verticals enhances the competitive position of both companies and represents a first step towards the development of combined GEO/LEO solutions. Overall, revenues at the Nine Month stage are in line with our expectations, and we confirm all our financial objectives.”

Highlights

• Third Quarter operating vertical revenues of €285m, broadly stable (-0.7%) quarter-on-quarter.

• Improvement in broadcast revenue trend (-6.8% year-on-year in the Third Quarter after -8.6% in the second quarter) with Third Quarter revenues broadly stable (-0.8%) relative to the Second Quarter.

• Robust double-digit growth for both Fixed Broadband and Mobile Connectivity in the Third Quarter, at respectively circa plus 30% and plus 25% year-on-year, highlighting the significant potential in Connectivity.

• Strong progress in the commercialization of EUTELSAT QUANTUM with six beams (out of eight) already sold after six months of operation and the entire capacity expected to be fully sold in the coming months.

• Global distribution partnership secured with OneWeb to address key connectivity verticals, deepening cooperation and showcasing operational synergies between the two companies.

• Nine Month Operating Verticals of €853m down 4.0% year-on-year and in line with expectations, enabling us to reiterate our objective for the Full Year of between €1,110 million and €1,130 million⁴.

• All other financial objectives also confirmed.

Third quarter revenues
Total revenues for the Third Quarter stood at €287 million down 4.8% on a reported basis and by 2.7% like-for-like.

Revenues of the five Operating Verticals (ie, excluding ‘Other Revenues’) stood at €285 million. They were down by 3.5% on a like-for-like basis excluding a negative perimeter effect of circa three points from the disposal of Euro Broadband Infrastructure (EBI) on 30 April 2021 and a positive currency effect of circa three points.

Quarter-on-quarter, revenues of the five Operating Verticals were down by 0.7% like-for-like.

Unless otherwise stated, all variations indicated hereunder are on a like-for-like basis, ie, at constant currency and perimeter.

Broadcast (61% of revenues)
Third Quarter Broadcast revenues amounted to €173 million, down 6.8% year-on-year, representing an improvement in trend relative to the Second Quarter (-8.6% year-on-year). The revenue decline reflected predominantly the effect of the partial renewal of capacity with Nilesat at 7/8°West, which is not offset by the resale of this capacity, and elsewhere, a slight erosion in the underlying business in Europe. Excluding the 7/8°West impact, Broadcast revenues experienced a low-single-digit decline.

Quarter-on-quarter, revenues were broadly stable with the slight, -0.8%, erosion reflecting the carry-forward effect of the above-mentioned 7/8°West headwind which impacted revenues from mid-October onwards. Revenues were flat excluding this item.

Revenues are expected to remain broadly stable in the Fourth Quarter relative to the Third Quarter.

Data & professional video (14% of revenues)
Third Quarter Data & Professional Video revenues stood at €40 million, down by 2.7% year-on-year.

In Fixed Data, which represents two thirds of this application, improved volume trends are now offsetting most of the negative impact of competitive pressure.

The Professional Video revenues trend saw a slight uptick, reflecting the phasing of a specific contract which is beneficial to the Second Half but neutral over the Full Year, as well as growth of occasional use.

Quarter-on-quarter revenues were stable reflecting notably the above-mentioned Professional Video tailwind as well as the broad stabilization of Fixed Data.

On the commercial front, a multi-year agreement was signed with Tuvalu Telecommunications Corporation for connectivity on the EUTELSAT 172B satellite to support the extension of corporate networks for government offices and businesses of the Tuvalu Islands.

We expect this application to decline at a mid-single digit pace over the Full Fiscal Year, consistent with previous indications.

Government services (12% of revenues)
Third Quarter Government Services revenues stood at €35 million, down 11.3% year-on-year. This reflected the negative carry-forward effect of US Government renewals, driven by the withdrawal of troops from Afghanistan with in particular a renewal rate of only 75% in Fall 2021, as well as the end of life in stable orbit of EUTELSAT 174A.

Quarter-on-quarter, revenues were down by 8.0% with the full effect of Fall 2021 renewals now in the quarterly base.

On the commercial front, as anticipated in February, the latest renewal campaign with the US Government (Spring 2022) resulted in a below-average renewal rate estimated at above 70% reflecting the continued impact of the geopolitical context in the Middle East. Elsewhere, the commercialisation of EUTELSAT QUANTUM made further strong progress with five beams now secured for Government Services, of which three for incremental business and two to favour the renewal of existing business.

In the Fourth Quarter, the full effect of Spring 2022 renewals relative to the Third Quarter should be largely offset by the ramp-up of new business on EUTELSAT QUANTUM.

Fixed broadband (6% of revenues)
Third Quarter Fixed Broadband revenues stood at €17 million, up 30.2% year-on-year on a like-for-like basis. They reflected the contribution from the wholesale agreements with TIM and Hispasat, the strong dynamic of our African operations and the ramp-up of the multi-beam agreement signed on EUTELSAT 65 West A with several Mexican service providers. Conversely, revenues also reflected the erosion of the legacy business of Bigblu Broadband on the KA-SAT satellite.

Quarter-on-quarter, revenues were up by 7.7%.

The favourable momentum in this application is set to continue into the Fourth Quarter.

Mobile connectivity (7% of revenues)
Third Quarter Mobile Connectivity revenues stood at €21 million, up 24.5% year-on-year. They reflected the carry-forward effect of the contract signed with Anuvu last year as well as the ongoing strong growth of Maritime, driven by the ramp-up of contracts with service providers signed in recent years and by the agreement inked earlier this year on EUTELSAT QUANTUM with a customer in the Middle East.

Quarter-on-quarter, revenues were up by 4.5%.

On the commercial front, we continue to see a robust pipeline of business for maritime mobility highlighting both the strong demand in this vertical as well as the quality of our in-orbit resources and services.

In the Fourth Quarter, growth is expected to decelerate as the comparison base will notably integrate the above-mentioned agreement with Anuvu.

Other revenues
‘Other Revenues’ amounted to €2.1 million in the Third Quarter versus €6.9 million a year earlier and €1.0 million in the Second Quarter. They included a negative (€2.8) million impact from hedging operations compared to a positive impact of +€4.3 million last year and a negative impact of (€2) million in the Second Quarter.  Globe Newswire