Eutelsat saw substantial progress in fixed broadband strategy paving the way for future return to growth.
Eutelsat’s Board of Directors recently announced its results for the first half of 2020-2021, under the chairmanship of Dominique D’Hinnin. The board reviewed the financial results for the half-year ending 31 December 2020.
The board claimed ongoing resilience within the Covid-19 context with stable operating vertical revenues quarter-on-quarter. Eutelsat also reported a high level of free-cash-flow to comfortably cover dividends. Other highlights of the first half were substantial progress in its Fixed Broadband strategy paving the way for a future return to growth. In addition, the company reported a solid start to the year enabling it to raise the low end of its FY 2020-21 revenue objective and absorb negative perimeter impact in H2.
Elaborating on the First Half, Rodolphe Belmer Chief Executive Officer of Eutelsat Communications said: “Eutelsat has produced a solid First Half performance with Operating Verticals’ revenues down by 2%, reflecting our resilience in the Covid-19 impacted context, and with an EBITDA margin at 76.7%, despite the costs associated with Broadband ramp-up. Free-cash flow generation at the half-year stage already amply covers the dividend paid in November. The past six months have been dynamic from a commercial point of view with the award of a further EGNOS payload to fly on EUTELSAT Hotbird 13G, a major wholesale agreement with Telecom Italia for the Italian capacity on EUTELSAT Konnect and Konnect VHTS following a similar agreement with Orange in France, several renewals and new deals in Sub-Saharan African broadcast. From an operational point of view, we have made significant headway on our Broadband strategy with the entry into service of EUTELSAT Konnect and the reorganisation of our retail arm, where the integration of Bigblu Broadband is progressing smoothly. In view of this solid start to the year, we are in a position to absorb the negative perimeter effect linked to Broadband transactions and to raise the low end of our FY 21 revenue objective.”
The Broadcast segment, which makes up 62% of Eutelsat’s revenues, was down 1.8% to 379 million for the first half, reflecting predominantly the impact from July 1 of the renegotiation of contract terms with Greece’s Forthnet. Q2 revenues stood at €188m down by 2.1% year-on-year. On a sequential basis, they were down 0.9% and were stable excluding a positive one-off of circa €2m booked in the first quarter. At 31 December 2020, the total number of channels broadcast by Eutelsat satellites stood at 6,608, down 3.9% year-on-year. HD penetration continued to increase, standing at 1,767 channels versus 1,605 a year earlier (+10%), implying a penetration rate of 26.7% up from 23.3% a year earlier.
On the commercial front, the African market remained dynamic with notably the expansion of the contract with Multichoice and the extension of the contract with ZAP, both operating at the 36°East orbital position.
Data & Professional Video, which accounts for 13% of revenues, stood at €81m, down by 4.5% year-on-year for the first half. Fixed Data continued to reflect ongoing pricing pressure and highly competitive environment in particular in Latin America, although it is now partially offset by improving volumes reflecting notably the carry-forward effect of new business secured in MENA last year. Professional Video remained in decline on a year-on-year basis although Occasional Use, which was initially strongly impacted by the Covid-related lockdowns, confirmed its recovery in the past few months following the reinstatement of live sports events.
Government Services revenues, which makes up 13% of Eutelsats revenues stood at 77m in the first half, up by 2.5%. Fixed Broadband stood at €42m, up 2.3% reflecting notably higher sales of terminals in Europe in a context of increased demand for internet connectivity. Mobile Connectivity stood at 34m for the first half, down 13.9% like-for-like, reflecting the impact of the Covid-19 crisis on Aero Mobility.
On the back of its robust first half revenue performance, Eutelsat claims to be in a position to raise the low end of its FY 2020-21 objective of revenues for the five Operating Verticals to between €1,190m and €1,220m (versus between €1,180m to €1,220m previously).