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Eutelsat Communications - First
Quarter 2013-2014 Revenues
October 29, 2013
Eutelsat Communications
reported revenues for the first
quarter ended
30
September 2013.
Business applications First quarter ended 30 September
In millions of euros 2012 2013 Change
Video Applications 216.3 217.1 +0.4%
Data & Value Added Services 61.1 66.3 +8.5%
Data Services 44.9 43.2 -3.8%
Value Added Services 16.2 23.0 +42.4%
Multi-usage 34.1 36.8 +8.1%
Other revenues 3.0 3.0 +1.6%
Total excluding non-recurring revenues 314.4 323.2 +2.8%
Non-recurring revenues - 0.3 NS
Total revenues 314.4 323.5 +2.9%
Note: unless otherwise
stated, all growth indicators or
comparisons are made against the
first quarter of the previous
fiscal year or
30
September 2012. The share
of each application as a
percentage of total revenues is
calculated excluding "other
revenues" and "non-recurring
revenues".
Commenting on the first quarter,
Michel de
Rosen, Eutelsat
Chairman and CEO, said:
"Eutelsat delivered first
quarter 2013-2014 revenues in
line with objectives. The
performance of Video
Applications reflects the lack
of available capacity for this
activity, which will be
addressed with future fleet
deployments. The Group's main
video neighbourhoods saw good
channel growth, demonstrating
the positive underlying trend in
our main application. Data and
Value-Added Services revenues
were underpinned by the growing
contribution from Value-Added
Services, up 42% in the quarter.
Revenues also factored in the
effect of the acquisition of
EUTELSAT 172A for Data Services
and Multi-usage.
"This quarter saw the
announcement of the acquisition
of Satmex which, together with
our multi-band EUTELSAT 65 West
A satellite to be launched to
65° West will equip us to scale
up our presence in the dynamic
Latin American markets. Our
in-orbit resources for
North Africa,
Middle East and
Central Asia
markets continues to expand with
the entry into service today of
the EUTELSAT 25B satellite
launched in August. Our
deployment plan for the
remainder of the current and the
coming two years is on track,
bringing additional capacity
that will principally serve
video markets in the fastest
growing regions, notably
Russia, the
Middle East and
Africa.
"Our financial objectives
remain unchanged for the current
and following two years. They
will be adjusted once the Satmex
acquisition is closed, and if
necessary in the context of the
current discussions with SES on
the 28°5 East situation."
FIRST QUARTER 2013-2014
REVENUE ANALYSIS
First
quarter revenues stood at €323.5
million, up 2.9%. Excluding
non-recurring revenues and at
constant currencies, revenues
increased 4.0%.
VIDEO APPLICATIONS (67.8% of
revenues)
Revenues from Video
Applications were virtually
stable at €217.1 million,
reflecting the lack of
incremental capacity and a high
fill-rate at key video
neighbourhoods.
- Channels broadcast from
the 7°/8° West neighbourhood
rose by 17% during the year
to 688 (+101) at
30
September 2013. This
neighbourhood, serving
broadcasters in the
Middle East
and
North Africa,
benefitted from contracts
signed with clients that
include Al Jazeera, Gulfsat,
MBC, Nilesat and Noorsat in
the previous fiscal year.
Although resources were
reinforced with the
redeployment of EUTELSAT 8
West C (formerly HOT BIRD
13A) to 7/8° West in
mid-September, transponders
contracted on this satellite
contributed only marginally
to first quarter revenues.
- Channels broadcast from
the 16° East neighbourhood
rose by 23% during the year
to 728 (+137) at
30
September 2013. New
contracts signed at this
neighbourhood, which serves
broadcasters in sub-Saharan
Africa, Indian Ocean Islands
and
Central Europe
include one towards the end
of the quarter with Telekom
Austria Group to support the
launch of its new white
label DTH platform for
Central and
Eastern Europe.
- Channels broadcast from
the 36° East neighbourhood,
serving broadcasters in
Russia and
sub-Saharan Africa rose by
9% during the year to 786
(+63) at
30
September 2013. The
DTH business at this
neighbourhood continues to
expand, with a new contract
signed with Lybid TV in
Ukraine.
At
30
September 2013, the total
number of channels broadcast by
Eutelsat's satellites was 4,713,
up 7.0% (+310 TV channels)
year-on-year. 439 of these
channels were in HD (from 379,
or +15.8%), implying an HD
penetration rate of 9.3%
compared to 8.6% at
30
September 2012.
Professional video revenues were
slightly down as the first
quarter of the previous fiscal
year benefitted from additional
demand for capacity generated by
broadcasters and service
providers delivering coverage of
the 2012 London Olympic Games.
Coverage of
Russia will be
further enhanced with the entry
into service of Express-AT1 (at
56° East) and Express-AT2 (at
140° East) in the second half of
the current financial year, on
which 16 transponders have
already been contracted to
TricolorTV.
DATA AND VALUE ADDED SERVICES
(20.7% of revenues)
Data Services revenues
declined by 3.8% to €43.2
million, reflecting the on-going
competitive environment as
point-to-point services continue
to be under pressure from the
roll-out of terrestrial networks
and, specifically in
Africa, from the
existing supply of satellite
capacity. This application is
also impacted by the on-going
expected negative impact of the
transfer of a Data customer from
7° East to 10° East in order to
prepare for the expansion at 7°
East of a broadcast customer.
This was not offset by the
integration of EUTELSAT 172A
into the fleet (acquisition
closed on
25 September 2012).
Value Added Services
revenues amounted to €23.0
million, up 42.4%.
Broadband services on KA-SAT
performed well, reflecting the
continuing success of the
intensified marketing efforts
and the enhanced broadband offer
launched in the last financial
year. Around 108,000 terminals
were activated at
30
September 2013 (from
91,000 at
30 June 2013).
- On the consumer
broadband side, distributors
in
France and
Spain were the
major contributors to net
adds, while distributors in
the
Ukraine and in
Russia started
to show traction. Training
of consumer equipment
installers has continued,
with a total of 4,000
trained installers in
October 2013.
- On the professional
side, the roll-out of
corporate networks
continues, with notably a
contract allowing
Montenegro's
police headquarters to
connect with the country's
border control stations. VPN
services on KA-SAT
specifically target
corporates and
administrations requiring
centralised control over
geographically dispersed
offices.
Mobile
connectivity services for the
maritime market, notably through
WINS, also contributed to
year-on-year revenue growth in
Value Added Services.
MULTI-USAGE (11.5% of revenues)
Revenues from Multi-usage
services stood at €36.8 million,
up 8.1%, with the integration of
EUTELSAT 172A into the fleet and
new contracts together more than
offsetting the carry forward
effect of the February /
March
2013 renewal campaign.
The September /
October
2013 contract renewal
campaign was in line with
expectations. Budgetary
constraints in
the United States
are still on-going, leading
Eutelsat to confirm a degree of
caution on the evolution of
revenues for this application.
OTHER AND NON-RECURRING
REVENUES
Other revenues, which mainly
comprise contributions from
service contracts with partners
and the Group's foreign exchange
hedging programme, were stable
at €3.0 million.
Non-recurring revenues stood
at €0.3 million.
OPERATIONAL AND LEASED
TRANSPONDERS
The
fill rate stood at 75.2% at
30
September 2013, compared
to 74.0% at
30 June
2013 and 75.8% at
30
September 2012. The
year-on-year evolution reflects
the entry into service of new
satellites (EUTELSAT 21B,
EUTELSAT 70B and EUTELSAT 3D)
and the redeployment of EUTELSAT
8 West C at the 7°/8° West
neighbourhood in
mid-September 2013.
EUTELSAT 25B, launched on
29 August
2013, became operational
on 29
October 2013 and is
therefore not included in the
table below.
At 30 September 2012 2013
Number of operational
transponders[1] 801 859
Number of leased transponders[2] 607 646
Fill rate 75.8% 75.2%
Note: KA-SAT's
82 spot beams are considered
transponder equivalents. The
satellite's fill rate is
considered to be at 100% when
70% of the capacity is taken up.
BACKLOG AT €5.4 BILLION (93%
VIDEO)
The
order backlog stood at €5.4
billion at
30
September 2013, up 3.9%
year-on-year and equivalent to
4.2 times 2012-2013 revenues.
The backlog represents future
revenues from capacity lease
agreements and can include
contracts for satellites not yet
in operation.
As of September 30 2012 2013
Value of contracts (in billions of euros) 5.2 5.4
In years of annual revenues based on last fiscal
year 4.2 4.2
Share of Video Applications 91% 93%
OUTLOOK FOR FISCAL YEAR
2013-2014 AND TWO FOLLOWING
YEARS
Eutelsat confirms the outlook
published on
30 July
2013 for the current and
next two years to
June 2016,
as follows:
Revenues (at
constant currency and excluding
non-recurring revenues)
Based
on a nominal satellite
deployment plan, the Group
targets organic revenue growth
above 2.5% for the current year.
With the deployment of
additional capacity, mainly in
2014 and 2015, average revenue
growth should be above 5% for
the two subsequent years to
30 June
2016.
EBITDA
The
EBITDA margin is targeted at
around 77% for each fiscal year
until 2016.
Active and targeted
investment policy
The
Group will continue to pursue a
targeted investment policy.
Average investments will stand
at around €550 million a year
over the three fiscal years to
30 June
2016. This includes
capital expenditures and
payments under export credit
facilities and under long-term
lease agreements on third party
capacity.
Sound financial structure
The
group will maintain a sound
financial structure to support
an investment grade credit
rating. Over the long term, it
aims at a net debt / EBITDA
below 3.3x.
Attractive shareholder
remuneration
The
Group remains committed to
sharing its profits with its
shareholders over the fiscal
years 2013-2016, with a pay-out
ratio of 65% to 75% of Group
share of net income.
Revenues, EBITDA and Capex
targets are given excluding the
impact of the acquisition of
Satmex.
In a
press release dated
4 October
2013, Eutelsat indicated
that revenues from the disputed
frequencies at 28.5° East were
estimated at some €20 million
for the remainder of the current
fiscal year 2013-2014 and
approximately €25 million for
each of the two following years;
the potential loss of these
revenues was not taken into
account in the above objectives.
They will be adjusted, if and
when necessary.
FLEET DEVELOPMENT update
Launch of EUTELSAT 25B and
redeployment of EUTELSAT 25C
EUTELSAT 25B satellite, a joint
venture satellite with
Es'hailSat from
Qatar, went into
commercial service on
29
October 2013 at 25.5°
East. The satellite was launched
on 29 August by an Ariane 5
rocket.
Traffic on Eutelsat's EUTELSAT
25C satellite at 25.5° East was
transferred onto Ku-band
transponders commercialised by
Eutelsat on the new EUTELSAT 25B
satellite in the night of 28 to
29 October. This transfer has
released EUTELSAT 25C for a new
mission at 33° East. It will be
copositioned next month with
EUTELSAT 33A at 33° East to
bring additional capacity to
this orbital location.
EUTELSAT 25B brings additional
capacity to 25.5° East to serve
broadcasters, businesses and
public agencies operating in the
Middle East,
North Africa and
Central Asia. The
new satellite operates in both
Ku and Ka-bands.
Satellite redeployments and
strengthening of in-orbit
security
Following the entry into service
of EUTELSAT 3D at 3° East,
EUTELSAT 3C was redeployed in
early July to the HOT BIRD
position at 13° East. Renamed
HOT BIRD 13D, it is now
colocated with the identical HOT
BIRD 13B and C satellites. With
each satellite equipped with 64
high-power Ku-band transponders,
they together span the entire
range of 102 Ku-band frequencies
at 13° East and deliver
broadcast customers
industry-leading levels of
security and 100% in-orbit
redundancy.
The
reconfiguration of the HOT BIRD
constellation released the HOT
BIRD 13A satellite which has
since been deployed to 7°/8°
West. Renamed EUTELSAT 8 West C,
it has enabled Eutelsat to
switch on additional
transponders at the key
neighbourhood for broadcasting
in
North Africa and
the
Middle East. This
orbital position will get a
further boost in the second half
of 2015 with the launch of
EUTELSAT 8 West B.
In
October
2013, EUTELSAT 4B was
de-orbited after reaching the
end of its operational life.
Estimated satellite launch
schedule (satellites generally
enter into service one to two
months after launch.)
Estimated
launch Main Main
(calendar applications geographic
Satellite Orbital position year) targeted coverage Transponders
Express
AT1[(1)] 56degree(s) East Q4 2013 Video Siberia 19 Ku
Express Far East
AT2[(1)] 140degree(s) East Q4 2013 Video Russia 8 Ku
Europe,
Africa,
Middle
East,
Central
EUTELSAT Telecoms, Asia, Latin 30 Ku / 9 Ka
3B[(2)] 3degree(s) East H1 2014 Broadband America / 12 C
Europe,
North
EUTELSAT Africa,
9B 9degree(s) East Q1 2015 Video Middle East 60 Ku
Middle
East,
Africa,
EUTELSAT 7degree(s)/8degree(s) South
8 West B West Q3 2015 Video, Data America 40 Ku / 10 C
Russia,
EUTELSAT Video, Data, Sub-Saharan Up to 52 Ku
36C[(1)] 36degree(s) East H2 2015 Broadband Africa / 18 Ka
EUTELSAT Video, Data, Latin Up to 58
65 West A 65degree(s) West H1 2016 Broadband America (Ku, Ka, C)
[1]Partnership
satellites with RSCC. For
Express-AT1 & AT2, transponders
indicated for Eutelsat portion
only
[2]When launched to 3°
East, EUTELSAT 3B will release
EUTELSAT 3D to 7° East to
address video markets in
Turkey
Recent EVENTS
Acquisition of Satmex
Eutelsat Communications
announced on
31 July
2013 it had reached an
agreement to acquire 100% of
Satélites Mexicanos, S.A. de
C.V. ("Satmex") for an
enterprise value of
US$1,142
million. This
acquisition, together with the
recently ordered EUTELSAT 65
West A satellite, will position
the Group as a major satellite
operator in
Latin America,
reflecting its strategy to
expand in high growth markets.
The
closing of the transaction is
expected by year-end 2013.
In
September
2013, the acquisition
financing was finalised at
attractive terms through a
2-year
$850 million bridge term
loan. The €450 million revolving
credit facility of Eutelsat S.A.
was also refinanced through a
new €450 million revolving
credit facility maturing in
September
2018 at improved terms.
Operations at 28°5 East
Following the decision of the
Arbitral Tribunal constituted
under the rules of the
International Chamber of
Commerce of
Paris that
concluded the first phase of
arbitration in
September
2013 and a preliminary
injunction by the regional civil
court of Bonn, SES and Eutelsat
Communications collaborated in
the best interest of customers
to ensure a smooth transition of
operations on frequencies at
28.5° East under a German
filing. As of
October 4,
SES was operating and Eutelsat
had ceased operating on these
frequencies. The transfer was
successfully completed in the
night of 3-4 October.
SES
and Eutelsat are in discussions
to find a solution regarding the
subject matter of the
arbitration.
Update on tax audit
As
disclosed in the Eutelsat
Communications 2012-2013
consolidated accounts, the
French tax authorities notified
Eutelsat on
20
December 2012 of a total
€27.5 million tax reassessments
over a 3-year period. These were
challenged by Eutelsat in view
of the strong arguments held. On
11
October 2013, the company
was informed that the French tax
authorities abandoned certain of
the reassessments for a total of
approximately €5.5 million. The
remaining reassessment was
confirmed and Eutelsat continues
to contest it.
governAnce
At its
meeting of
16
September 2013, the Board
of Eutelsat Communications
(Euronext Paris: ETL) was
informed by its Chairman,
Jean-Martin Folz,
that he would not seek to renew
his mandate, which expires at
the General Assembly of
Shareholders of
7
November 2013, in order
to respect corporate governance
recommendations on multiple
directorships by the Afep-Medef.
To enable the Board to
immediately appoint a successor
and to avoid uncertainty during
a period of transition,
Jean-Martin Folz
has resigned as Chairman. He
will remain a Board member until
the General Assembly. The board
expressed its appreciation for
Jean-Martin Folz's
contribution to the strategic
directions pursued by the Group
over the last two years.
Noting
that the recent developments of
Eutelsat and the reorganisation
of shareholders no longer
justifies the separation of the
roles of Chairman and CEO, the
Board decided to merge the two
functions, reverting to the
practice in place from 2004 to
2009. The Board subsequently
unanimously decided to appoint
Michel de
Rosen, who has
been CEO since 2009, as Chairman
and CEO.
First quarter revenues
presentation for analysts and
investors
Eutelsat Communications will
hold an analysts and investors
conference call in English on
Tuesday, 29October 2013
to present its first quarter
2013-2014 revenues. The
conference call will begin at
6:30 pmParis
time (London:
5:30 pm,
New York:
12:30 pm).
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