EUTELSAT Communications First Quarter 2011/2012

November 3, 2011

 

Eutelsat Communications reported revenues for the first quarter ended September 30 2011.

Business applications	First quarter ended September 30
In millions of euros	2010	2011	Change
Video Applications	195.5	198.2	+1.4%
Data & Value Added Services	58.9	59.6	+1.2%
Multi-usage	28.8	36.2	+25.9%
Other revenue	2.4	1.3	N/S
Non-recurring revenue	--	--	--
TOTAL	285.6	295.4	+3.4%

Note: Unless otherwise stated, all growth indicators or comparisons are made against the first quarter of the previous fiscal year or September 30, 2010. The share of each application as a percentage of total revenues is calculated excluding “other revenues” and “nonrecurring revenues”.

Commenting on the first quarter, Michel de Rosen, Eutelsat CEO said, “Eutelsat generated revenue growth of 3.4% in the first quarter. This reflects a temporary transitional period for the Group until current capacity constraints, resulting from two years of stronger than expected uptake of our inorbit resources, are alleviated.

Two new satellites, ATLANTIC BIRD™ 7 and W3C, will enter into full commercial service during the second quarter. Both of these satellites cover fastgrowing video markets including the Middle East, North Africa and Central Europe. The W3C satellite will also significantly expand our capacity to serve data markets in Europe, Africa, the Middle East, and Central Asia.

The availability of these replacement and expansion resources, and a further five satellites to be launched between now and June 2014, will enable us to meet continued solid underlying demand in our markets. We therefore confirm our revenue target for the current year of above €1,235 million, and of above 7% CAGR for the 20112014 outlook period accompanied by an EBITDA margin of above 77%.”

FIRST QUARTER 20112012 REVENUE ANALYSIS

First quarter revenues stood at €295.4, million up 3.4% despite limited available inorbit Kuband capacity. At constant currencies, revenues would have increased 5.5%.

VIDEO APPLICATIONS (67.4% of revenues)

Revenues from Video Applications rose 1.4% to €198.2 million. This result reflects capacity constraints occasioned by the rapid takeup of inorbit capacity that became available in 20092010, and the 12 month delay in the arrival of new capacity at 16° East following the nonavailability of the W3B satellite. Moreover, the first quarter of the previous year benefitted in part from an exceptional boost from broadcasting of the World Cup Soccer tournament.

The number of TV channels across Eutelsat’s fleet continued to increase, demonstrating the dynamism of television broadcasting. At September 30, 2011, Eutelsat’s fleet was transmitting a total of 3,952 television channels, up 252, from 3,700 last year. The number of channels broadcast in High Definition reached 239, up 24%, from 192.

Significant channel growth was recorded at two key video neighbourhoods which benefitted from the availability of new resources during the 2009 and 2010 period:

· 7° West, with coverage of the Middle East and North Africa, saw the number of channels increase by 45.

The 7° West neighbourhood now carries 394 television channels, comprising a mix of Arab language content and international channels;

· 36° East covering Russia and SubSaharan Africa, saw an increase in the number of TV channels (up 117) and now broadcasts a total of 686 channels. These markets benefitted in 2010 from the arrival of the W7 satellite, which more than doubled capacity.

Future growth of video applications will be accelerated by the entry into service of two satellites, ATLANTIC BIRD™ 7 at 7° West and W3C at 16° East.

DATA AND VALUE ADDED SERVICES (20.3% of revenues)

Data Services revenues grew by 2.5% to €48.3 million, following recent years of double digit growth, fuelled by the entry into service of the W2A satellite in May 2009, and the W7 satellite, in January 2010. Carrying Kuband and Cband capacity to serve Africa, the Middle East and Central Asia, these satellites enjoyed record ramp up reflecting the dynamism of these markets.

With two wide beams covering Europe, the Middle East, Africa and Central Asia facilitating GSM backhaul, enterprise networks, and Internet backbone connectivity, the W3C satellite is scheduled to enter into service on 9 November, and will provide additional resources to meet the demand of data customers.

Value Added Services revenues were €11.3 million, down 3.9%. This reflected an unfavourable yearonyear comparison base for DSTAR revenues, as the first quarter last year was boosted by the sale of terminals to support the rollout of the French railway (SNCF) intrain Internet access service to part of its network. The maritime business using DSTAR terminals to connect ships at sea to highspeed internet saw growth driven by the demand on cruise ships in the Mediterranean.

Revenues from the Tooway™ consumer broadband are ramping at a pace inline with the Company’s expectations. Business development continued across the entire KASAT footprint, which covers Europe, the Middle East, parts of Central Asia and the Mediterranean Basin. Contracts had been signed with 20 distributors in 13 countries as at September 30.

MULTIUSAGE (12.3 % of revenues)

Revenues from Multiusage services stood at €36.2 million, up 25.9%. Demand for government services remained strong, driven by the renewal of capacity from existing contracts as well as new contracts signed during the quarter on satellites covering North Africa and the Middle East.

OTHER REVENUES

Other revenue, which comprises mainly contributions from some service contracts with partners and the Group’s foreign exchange hedging programme, contributed €1.3 million compared to €2.4 million the previous year.

OBJECTIVES FOR FISCAL YEAR 2011–12 AND NEXT THREE YEARS CONFIRMED

Short and mediumterm outlook confirmed: Revenues: in excess of €1,235 million for fiscal year 20112012 and a 3year CAGR above 7% over the next three fiscal years to June 2014.

EBITDA margin: above 77% for each fiscal year until June 2014 – with EBITDA above €955 million for fiscal year 20112012.

Average c apital expenditure : €550 million per annum over the three year period ending June 30, 2014 Distribution: 50% to 75% of Group share on net income Net debt/EBITDA: Below 3.5x (Investment grade rating objective)

RECENT EVENTS AND FLEET DEPLOYMENT

New inor bit resources poised to accelerate topline growth in the second half:

ATLANTIC BIRD™ 7:

Launched on 24 September 2011, the ATLANTIC BIRD™ 7 satellite entered into service on 23 October at the 7° West orbital position, the leading video neighbourhood in North Africa and the Middle East. Eutelsat operates at this position in close coordination with the Egyptian satellite operator, Nilesat, and currently broadcasts 394 Arab and international channels to an audience of nearly 30 million satellite homes.

With up to 50 transponders, 11 more than ATLANTIC BIRD™ 4A, the satellite it replaced, ATLANTIC BIRD™ 7 has significantly increased resources in this key video neighbourhood, offering superior coverage across the Gulf states, up to the Atlantic coast of Northwest Africa.

Having completed its mission at 7° West, the ATLANTIC BIRD™ 4A satellite is now released to continue full commercial service at another Eutelsat location. The satellite is being redeployed to 3° East to address data and telecom markets in Europe and SouthWest Asia. It will be called EUTELSAT 3C and will be colocated at 3° East with EUTELSAT 3A.

W3C:

Launched on 7 October 2011, the W3C satellite is scheduled to enter into service on 9 November at the orbital position 16° East. It replaces the EUROBIRD™ 16, W2M and SESAT 1 satellites. Through its configuration of 56 transponders, (53 Ku and 3 Ka), it will address markets for broadcasting and telecom/data services via four footprints:

· A highpower footprint optimised for DirecttoHome broadcasting in Central Europe will anchor the 16° East neighbourhood as a point of reference for satellite TV in the region, currently broadcasting 481 TV channels and serving over 11 million households;

· A second beam, centered over the Indian Ocean islands, will allow broadcasters serving this geography to ensure the extension of their subscription television offers and accelerate the transition to “alldigital” freetoair channels to the French departments of Mayotte and the Reunion Islands;

· A wide footprint serving Europe, North Africa and the Middle East will expand capacity to serve markets for data networks and newsgathering;

· A new footprint for 16° East, with Kuband coverage stretching from Senegal to Madagascar and enabling connectivity with Europe in Kaband, will respond to highgrowth applications that include GSM backhaul and Internet access for enterprises and public agencies.

Following WC3’s entry into service, EUROBIRD™ 16 and SESAT 1 will go into inclined orbit at 16° East and W2M will be redeployed to an alternative location.

Newly commissioned satellite:

EUTELSAT 9B: Covering Western Europe

Eutelsat Communications announced it is initiating a new satellite programme that will significantly expand and diversify resources at its 9° East location which addresses high growth video markets across Europe. A high capacity Kuband satellite called EUTELSAT 9B, ordered from Astrium, will be launched to 9° East at the end of 2014. Open for business since 2007, Eutelsat’s 9° East position is currently occupied by the 38transponder EUROBIRD™ 9A satellite. Broadcasting more than 330 channels, of which over 10% already in HD, it is one of the Group’s fastestgrowing neighbourhoods. Its close proximity to Eutelsat’s flagship HOT BIRD™ satellites at 13° East also gives satellite viewers the opportunity to increase viewing choice through a dualfeed antenna.

Moody’s Upgrade:

On October 20, Moody's Investors Service issued a note upgrading the senior unsecured issuer rating of Eutelsat S.A. to Baa2 from Baa3 and bank loan rating at Eutelsat Communications S.A. to Baa3 from Ba1. These new credit ratings both have a stable outlook.