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Eutelsat Communications reported revenues for the Third Quarter and Nine Months ended 31 March 2020.

 

14 May 2020

Eutelsat Communications  today reported revenues for the Third Quarter and Nine Months ended 31 March 2020.

 

 

Rodolphe Belmer, Chief Executive Officer, commented: “Third Quarter revenues were in line with our expectations, and confirmed the underlying improvement in Operating Verticals trends. In particular, Broadcast was highly resilient with stable revenues year-on-year and return to quarter-on-quarter growth with ongoing signs of commercial dynamism in emerging markets with a new DTH platform in Sub-Saharan Africa and the extension of a contract in the Balkans. Other commercial highlights include a solid Spring Renewal campaign with the US Government, a multi-year contract with Telenor Maritime in Mobile Connectivity, and for Konnect Africa, a MoU to connect several thousand schools across the Democratic Republic of Congo. 

“Faced with the unprecedented constraints of the Covid-19 crisis, our focus is on the health and well-being of our employees and ensuring business continuity for our customers at a time when demand for reliable connectivity has never been higher. Our business is resilient compared with many industries, in particular our core Broadcast vertical. As a result, we expect the impact on Full Year revenues to be limited, reflecting mainly the effects of confinement on Mobility, Professional Video and to a lesser extent Fixed Broadband. As we continue to assess the effects on future years, we do so with the confidence that our strong financial position and cash-flow generation capacity, together with our combination of resilient heritage activities and connectivity-related growth opportunities will ensure we are well positioned to withstand challenges of the current environment.” 

 1 Change at constant currency and perimeter. The variation is calculated as follows: Q3 2019-20 USD revenues are converted at Q3 2018-19 rates.   2 Other revenues include mainly compensation paid on the settlement of business-related litigations, the impact of EUR/USD revenue currency hedging, the provision of various services or consulting/engineering fees and termination fees.    

THIRD QUARTER REVENUES3  Total revenues for the Third Quarter 2019-20 stood at €322.0 million, down 4.4% year-on-year.  Revenues for the five Operating Verticals (ie, excluding ‘Other Revenues’) were down by 0.5% on a reported basis and by 1.6% on a like-for-like basis, excluding a positive currency effect of circa 1.1 points. There were no perimeter effects this quarter.  Quarter-on-quarter, total revenues were up by 0.9%. The revenues of the Operating Verticals were up 1.2% like-for-like.  Unless otherwise stated, all variations indicated below are on a like-for-like basis, ie, at constant currency and perimeter. 

Broadcast (62% of revenues)  Third Quarter Broadcast revenues were stable at €198.8 million on a year-on-year basis. This reflected on one hand the carry-forward effect of the return of a couple of transponders in Russia in July and, on the other, higher revenues notably in MENA and at 28.5°East. On a quarter-on-quarter basis, total Broadcast revenues rose by 2.1%, including a positive one-off for circa €1m. At 31 March 2020 the total number of channels broadcast by Eutelsat satellites stood at 6,867, down 2% year-on-year and stable quarter-on-quarter. On a year-on-year basis, HD channels rose by 10% to 1,667, implying a penetration rate of 24.3% compared to 21.5% a year earlier. On the commercial front, activity remained dynamic with the addition of a new platform in Sub-Saharan Africa - Ghana RCS at 7°East - as well as the renewal and expansion of business in the Western Balkans at the 16°East orbital position.   During the quarter, EUTELSAT 7C entered into service, bringing 19 incremental transponders to the African market which are expected to gradually ramp-up; elsewhere EUTELSAT 5 WEST B entered into service, replacing EUTELSAT 5 West A. 

Data & Professional Video (14% of revenues)  Third Quarter Data & Professional Video revenues stood at €44.8 million, down 7.6% year-on-year. This reflected ongoing pricing pressure in a highly competitive environment. As expected, there was some improvement in trend relative to the First Half (-17.3%) on the back of improved volumes and an easing comparison basis. Occasional Use revenues, related mostly to the broadcast of live sports events, started to reflect the impact of the Covid-19 crisis during the course of March and will be more deeply affected in the Fourth Quarter.  On a quarter-on-quarter basis, revenues were stable.                                                          

 3 The share of each application as a percentage of total revenues is calculated excluding “Other Revenues”. Unless otherwise stated, all growth indicators are at constant perimeter and currency.

Government Services (12% of revenues)  Third Quarter Government Services revenues stood at €40.0 million, down 2.4% year-on-year. They reflected on one hand the negative carry-forward effect of 2019 renewal rates (85% in Spring and 90% in Fall) and on the other the initial contribution of the EGNOS payload which entered into service on 15 February on EUTELSAT 5 WEST B.     On a quarter-on-quarter basis, revenues were up 2.3%.  The latest round of contract renewals with the US Government (Spring 2020) resulted in an estimated renewal rate of above 85% in value. Fourth quarter revenues will benefit from the full contribution of EGNOS and from the relocation of the EUTELSAT 7A satellite.   

Fixed Broadband (6% of revenues)  Third Quarter Fixed Broadband revenues stood at €18.8 million, down 2.6% year-on-year and down 2.3% quarter-on-quarter. The decline reflected yet again the absence of new capacity and a lower contribution from traditional distributors in Europe which is yet not offset by the ramp-up of the Preferred Partnership Program.  In Africa, revenues remain modest at this stage as we remain focused on trialling distribution models on a limited scale. However, an MoU was signed with Schoolap and Flash Services to provide high speed connectivity to 3,600 schools in Democratic Republic of Congo, with scope to strongly expand in coming years, highlighting the opportunity represented by government-backed digital inclusion programmes.  

Mobile Connectivity (6% of revenues)  Third Quarter revenues for Mobile Connectivity stood at €20.8 million, up 2.0% year-on-year reflecting the continued ramp-up of Maritime business. The effect of the Covid-19 crisis on this application was limited to a slowdown of capacity contracts on KA-SAT in March; however, the direct and indirect impact of the shrinkage in airline and maritime traffic will be more pronounced in the Fourth Quarter.  On a quarter-on-quarter basis, revenues were down 3.5%. As a reminder, Second quarter revenues included the catch-up of a negative one-off of circa €1m which affected the First Quarter. On the commercial front, a multi-year contract was signed with Telenor Maritime for maritime mobility services in selected sailing areas, highlighting the long-term potential of this vertical as well the quality of Eutelsat’s in-orbit resources and tailormade customer solutions.   

Other Revenues  Other Revenues amounted to -€1.1million in the Third Quarter versus €12.1 million a year earlier which included a significant one-off engineering fee. They included a -€3.3 million impact from hedging (-€5.7 million last year).