Eutelsat Communications: Third Quarter and Nine-month 2021-22 Revenues
Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL) (Paris:ETL) 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."
THIRD QUARTER REVENUES5
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' 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.
OPERATIONAL AND UTILIZED TRANSPONDERS
The number of operational transponders as of 31 March 2022 stood at 1,358 down by 22 units quarter-on-quarter, the latter reflecting principally the end of life in stable orbit of EUTELSAT 174A.
The number of utilized transponders stood at 961, down 13 units quarter-on-quarter, reflecting principally the same effect as above as well as the Fall 2021 renewal campaign with the US Government.
As a result, the fill rate stood at 70.7% compared with 69.5% a year ago and 70.6% at end-December 2021.
Note: Based on 36 MHz-equivalent transponders excluding high throughput capacity
The backlog stood at €4.0 billion as of 31 March 2022 versus €4.5 billion a year ago, and €4.2 billion at end-December 2021, reflecting its natural consumption in the absence of major broadcast renewals this quarter.
It was equivalent to 3.3 times 2020-21 revenues, with Broadcast representing 63%.
Note: The backlog represents future revenues from capacity or service agreements and can include contracts for satellites under procurement.
NINE MONTH REVENUES
Revenues for the first Nine Months of FY 2021-22 stood at €859 million, down by 7.6% on a reported basis and by 4.0% at constant currency and perimeter.
Revenues of the five Operating Verticals (excluding 'Other Revenues') were down by 6.0% on a reported basis. They were down by 4.0% on a like-for-like basis excluding a positive effect from currency representing circa one point and a negative perimeter effect of circa three points from the disposal of Euro Broadband Infrastructure (EBI) on 30 April 2021 only partly offset by the consolidation of Bigblu Broadband Europe since 1st October 2020.
At a 1.20 €/$ rate (rate as per financial objectives) they stood at €840 million.
On the back of the performance of the first Nine Months, we confirm our objective for the Full Year of Operating Vertical Revenues of between €1,110 to €1,130 million9.
All other elements of the financial outlook are also confirmed:
The policy of a stable to progressive dividend is also reiterated.
This outlook is based on the nominal deployment plan outlined below. It assumes no material deterioration of revenues generated from Russian customers.
Nominal deployment program
Since the last quarterly update in February 2022, there is no change in the nominal deployment program below.
Changes in the fleet since 30 June 2021
EXPOSURE TO RUSSIAN CRISIS
As disclosed in the latest Universal Registration Document, Eutelsat derived circa 6.3% of its revenues from Russian customers in Fiscal Year 2020-21 and has no material revenue exposure to Ukraine. The Group also leases capacity on four satellites owned by the Russian operator, RSCC, serving mostly the above-mentioned Russian customers and representing a net present value (included in Net Financial Debt) of €322 million as of 31 December 2021.
Furthermore, the OneWeb low-orbit constellation in which Eutelsat owns a 22.9% stake had to suspend the remaining six upcoming launches which were planned from Baikonur Cosmodrome. Since then, OneWeb entered into agreements with SpaceX and New Space India that will enable to resume satellite launches.
Consistent with its Code of Ethics and as a provider of infrastructure globally Eutelsat upholds a commitment to neutrality and is therefore guided by sanctions and by the decisions of its competent regulatory bodies, which it strictly applies. In this context, Eutelsat immediately implemented EU Council Regulation 2022/350, suspending the broadcasting activities of Russian television stations such as Russia Today.
Third Quarter 2021-22 revenues conference call
A conference call will be held on Thursday, 12 May 2022 at 18.30 CET / 17.30 GMT / 12.30 EST
To connect to the call, please use the following numbers:
- France: +33 (0) 1 76 77 25 07
Access code: 5156191#
Instant replay will be available from 12 May, 22.30 CET to 19 May, 22.30 CET on the following numbers:
- France: +33 (0) 1 70 48 00 94
Access code: 5156191#
About Eutelsat Communications
The forward-looking statements included herein are for illustrative purposes only and are based on management's views and assumptions as of the date of this document.
Such forward-looking statements involve known and unknown risks. For illustrative purposes only, such risks include but are not limited to: risks related to the health crisis; operational risks related to satellite failures or impaired satellite performance, or failure to roll out the deployment plan as planned and within the expected timeframe; risks related to the trend in the satellite telecommunications market resulting from increased competition or technological changes affecting the market; risks related to the international dimension of the Group's customers and activities; risks related to the adoption of international rules on frequency coordination and financial risks related, inter alia, to the financial guarantee granted to the Intergovernmental Organization's closed pension fund, and foreign exchange risk.
Eutelsat Communications expressly disclaims any obligation or undertaking to update or revise any projections, forecasts or estimates contained in this document to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based, unless so required by applicable law.
The information contained in this document is not based on historical fact and should not be construed as a guarantee that the facts or data mentioned will occur. This information is based on data, assumptions and estimates that the Group considers as reasonable.
Quarterly Reported revenues for FY 2020-21 and FY 2021-22
The table below shows quarterly reported revenues.
Quarterly Proforma revenues for FY 2020-21
For comparability purposes, the table below shows proforma quarterly revenues, which exclude the contribution of EBI from 1st July 2020.
1 Like-for-like change.
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